[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> house speaker john boehner said today he disagrees with a proposal from congressman tom call who suggested he and his gop colleagues should renew middle-class tax cut and allowed the top tax rates to let -- rise. tonight, we speak from -- hear from speaker boehner, house democrats, and president obama on the so-called fiscal clef. later, alan simpson and erskine bowles talk about some of the fiscal choices facing congress. >> the program began under one of the advisers to president

franklin roosevelt to document the conditions under which people were living. this was back when we did not have television. we had radio, but a lot of places did not have electricity, so they could not listen to the radio broadcast to find out what was going on in other parts of the country. he was an economist from columbia university. he was the head of this project. in 1939, when kodak introduced color film, they sent him to have his photographers try out, see what they could do. kodak was trying to establish a new market and product, and they wanted people who would know how to use it effectively to try it out and publicize it. >> america in the 1930's and 1940's -- the library of congress curator shares some of

the 1600 color photographs taken during the depression and world war ii. .nday at 7:00 p.m. on 3. -- c-span 3. >> now, john boehner and house republican leaders talk about fiscal cliff negotiations. he says he is optimistic a deal can be reached with the president. >> morning, everyone. going over the fiscal cliff will hurt our economy and will her job creation in our country. republicans are committed to continuing to work with the president to come to an agreement to avert the so-called fiscal clef. one reason why we believe that we put revenue on the table as long as it is accompanied by

serious spending cuts to avert a crisis. we believe this is the president's request for a balanced approach to this issue, and we are going to continue to work with the president to try to resolve this in a way that is fair for the american people. we all now that we have had the spending crisis coming at us like a freight train. it has to be dealt with. in order to try to come to an agreement, republicans are willing to put revenue on the table. it is time for the president and democrats to get serious about the spending problem our country has. i am optimistic. we can continue to work together to avert this crisis, sooner rather than later. >> good morning. last week, the president's chief political adviser indicated that medicare and medicaid are the main drivers of our deficit.

i know we have seen this morning also several editorial writers indicate the same, that it is important that we put these drivers of the deficit on the table and include them as part of any agreement to avoid the fiscal cliff. as the speaker said, we have done our part. we have put revenues on the table, something we did not do two years ago during the debt ceiling negotiation. we still believe that it is most important for us to address the economic situation in this country where so many people are out of work. that is why we take the position and believe strongly that increase in marginal rates i, income-tax rates, is not the way to produce growth and put people back to work. but we have not seen any good faith effort on the part of its administration to talk about the

real problem that we're trying to fix. i am told mr. bowles, some of us will meet with him later today, said earlier this morning there has been no serious discussion by the white house on entitlements, on medicare and medicaid. this has to be a part of this agreement, or else we just continue to dig the hole deeper asking folks to allow us to kick the can down the road further. that we do not want to do. >> as we continue to move to solve the fiscal cliff problem, one thing we want to look at is make sure small business is ok. i had my first business when i was 19 years old -- a sandwich shop. listen to small businesses, look across there, they are the engine that makes the economy grow. today we will meet with individuals in the business community. next week, a small business coalition will talk to us on ways we can solve the fiscal

cliff while the same time growing this economy. the goal of this republican majority is to solve the fiscal cliff once and for all and put us on a path to grow the economy. >> we are 34 days away from what would be the largest tax increase in american history, and the speaker boehner and the republicans have put forward a balanced plan that would prevent that from happening and not devastate our economy at a time when our economy continues to struggle and people are having a tough time finding work. we need to take action that will insure that small-business owners all across this country continue to be able to survive. many have said that the president's approach in raising taxes would act to devastate the economy. ernst and young estimated jobs lost -- a plan that would cut nearly 1 million jobs is a nonstarter.

we are working to find a better way. a common-sense way. we can raise tax revenue by simplifying the tax code, not increasing tax rates. we can address wasteful government spending that jeopardize an hour commitments in the national defense and protecting our most honorable. we can jump-start our economy by assuring americans that congress and the president can work together to get the job done and deal courageously with the pressing problems of today. when it comes to the fiscal cliff, the president and congress will either fail together or we will succeed together. there is nothing in between. i am confident that we can pass the test and do what is good and right for the american people. >> the president has been talking a lot about taxes lately, and as acpa who practiced for years and a member of ways and means committee,

there is no one who likes to talk about tax more than i do. but let's be honest -- talking about taxes is not going to solve the problem that america faces. we have to turn to the spending side of the ledger. furthermore, his tax proposal will kill about 700,000 jobs and do harm to the economy, again, the wrong direction. i think house republicans have set a fine president -- we passed a framework to address the issue of taxes. fundamental, comprehensive tax reform. pro-growth policies that kickstart the economy rather than hurting the economy. likewise, we have laid out a bipartisan plan to address the drivers of our debt in the spending programs. i think house republicans are eager to work and negotiate with democrats in the senate and the president once they figure out what their proposal is to

address the fundamental problems. >> my colleagues have laid out the issues very well. republicans want to avert the fiscal cleft in its entirety -- liff in its entirety. what we need is the president to come forward with a plan on how he wants to avert the fiscal cliff. it is irresponsible of us not to deal with the spending issue and simply to push for raising taxes on hard-working american people. many of us come from small- business backgrounds -- family owned businesses. we understand the situation very well. but it isn't -- it is important we not pass this problem along to our children and grandchildren, but we deal with it in a responsible way. the republicans have come forward with a responsible plan and will continue to do that and look for ways to keep us from

going over this fiscal cliff. >> we have time for a couple questions before we go to our meeting. >> your colleague has told other colleagues that it is time to vote to extend the middle-class tax cut -- i want to get your take on his comments. more importantly, is this the direction the conference is going? >> i told tom earlier that i disagree with him. he is a wonderful friend and a great supporter of mine, but raising taxes on the so-called top 2%, half as taxpayers are small business owners who pay their taxes with personal income tax filing every year. the goal here is to grow the economy and control spending. you are not going to grow the economy if you raise tax rates on the top rates. it will hurt small businesses, per our economy -- it is why it

is not the right approach. we are willing to put revenue on the table as long as we're not raising rates. >> republicans have not yet put a number on revenue. democrats seem to be taking entitlement more and more off the table -- neither side seems willing to lead here in terms of taking a real risk. why are you than optimistic about? >> i do not think this is the appropriate place to negotiate. what may be the biggest bill many members will ever vote on. i know you would all love to have me negotiate here with all of you, but i think i will save the negotiations for the president. >> why are you optimistic a deal can be reached? >> the president understands and i understand that going over the fiscal cliff will hurt our economy and her job creation in our country. this is not good for our country. it is as simple as that. the president understands that. i was born with a glass half

full. i am an optimist. >> speaker boehner and anyone else who wants to take this, as far as spending cuts go what specific cuts would you like to see? >> we will have that conversation with the president. we do not need to have it here. thank you, everybody. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> now we hear from house democrats on the so-called fiscal clip than deficit reduction. caucus leaders john larsen and xavier becerra spoke to reporters. this is 30 minutes. >> good morning. is everybody set? well, i thank you, and yet another caucus where we were fortunate enough to have gene sperling from the white house today continuing to talk about the importance of making sure we put this nation back to work.

because we know and continue to underscore the that job creation equals deficit reduction. and clearly democrats and republicans both agree that we need to put the country back to work. democrats would like to underscore the need for infrastructure in the northeast -- we are still reeling from the affects of sandy. the pleas of governors like malloy, cuomo, and christie, all are calling for us to focus on infrastructure. it is not only needed in a devastated northeast but clearly across this nation. one only has to read about the situation of roads and bridges to understand the importance of infrastructure and investment. clearly, people need to go back to work.

that is something positive that we all agree on that can be done and should be done. but as we noticed today, there are no votes on the united states congress and the house of representatives today. we also agree, and emphasize this again, as did gene sperling -- everyone, and we mean everyone, should get $250,000 in tax breaks. everyone -- and so that means that even billionaires get that first $250,000. and everyone is in agreement -- the republicans do not want to see the middle class go without this tax cut. so where we disagree, let us push that off. where we agree, let's embrace. further, we discussed again the

long term effects of our deficit, which are directly tied to health care -- the work that has been done in the congress as it relates to constructing and exchange that will take place in 2014 and go into effect, and the tools that we provided a initially on a concept that by its very nature was one designed by republicans, that there is ample room for us to tackle the unbelievable rise in cost of health care to 17% of our gross domestic product by focusing on dropping those costs. most recently the president of aetna said very clearly -- not

only if we drop those costs would we make health care more affordable, we would also deal with balancing our national debt. so these are all very constructive areas that we all should agree to. that the american public wants us to pursue. we remain optimistic because of the way the president has gone out there and is selling this concept, not only in white house meetings but out to the general public. i commend leader boehner, speaker boehner, setting the appropriate tone in the conference. we know there are differences in both the caucus and the conference, but it is the common thread that should unite us and allow us to move forward in a way that will both put the

country back to work, provide for deficit reduction, and deal long term with the concept of debt reduction while allowing americans to be fully insured and covered under their health care. that is why we are optimistic and we would like to see more work effort here, but we remain optimistic as we go forward. tomorrow we will have another caucus meeting, and election. it will be my high honor at that point to turn the gavel over to xavier becerra, who will be the next chairman of the democratic caucus. >> thank you very much. it will be a pleasure tomorrow if i am successful to succeed all the work you have done over the last four years as our

chairman. i very much look forward to trying to come close to the success you have had in being the chairman of our great democratic caucus. i want to reiterate what chairman said -- it was a great meeting. folks are back after thanksgiving. we wish everyone in america a great thanksgiving. it was tough for some folks from hurricane sandy, but we hope every single american in this country found a way to be able to celebrate thanksgiving with family and friends and loved ones. we had a group of members, including new members, who were very excited and optimistic. the chairman said we leave the room truly believing that we can get this work done before december 31. we leave the room today believing there is no reason why we cannot get that done. just a couple points -- a bit of context. four years ago, if he checked the records, you will find four

years ago in the month of november america bled 790,000 jobs. 790,000 americans lost their jobs four years ago. last month, the jobs report -- 180,000 new jobs created in this country. not as many as we want, but we're not losing jobs. we're certainly not hemorrhaging hundreds of thousands of jobs that we were four years ago. we are on the move, making progress, but as the president keeps and, we have to do more. this is not the time to put your foot on the break of economic recovery. we would hope that our republican colleagues would join with us and do exactly as our chairman just said. and that is where we have agreement. let's move forward. there is clear agreement with

democrats and republicans that we have near-unanimous if not unanimous support for trying to move forward on making sure the middle class is not impacted by the december 31 deadline. we can then deal with the 2% wealthiest americans and how we deal with them in terms of the tax rates. but first, let's take our foot off the economic brake and let this economy continue to build. it seems a little disorienting and ale disconcerting to hear that there may be some people in this congress who put their pledge to a special interest ahead of their pledge of allegiance to this country. and while we are beginning to see some cracks in that cement block that is the special interest group that has gotten

these republican members to sign these no-tax pledges, there are not that many. you hear a high ranking republican in the house talking about telling his colleagues to join with president obama to move forward in preserving the tax rates for the middle-class. as the chairman just said, for everyone, including warren buffett, ross perot -- they would get tax relief for the first $250,000 of their income as well. you hear some republicans collin this pledge handcuffs that keep them from moving forward. we would hope in the short periodically have before december 31, we would not let a pledge to a special interest supersede the pledge of allegiance to make to our country. finally, once again, the american people are way ahead of the politicians.

the american people by two- thirds agree with president obama that we must have a balanced approach to solving deficit issues and moving toward economic growth and job creation. two-thirds. if they were a vote by the american public today, there would be a landslide in favor of providing for the 2% wealthiest americans to pay a little more in taxes to help them get to the point of a balanced approach. a landslide victory. including republicans in america who agree with that. there is no reason to delay. we think we can move forward. the reason there is optimism coming out of this caucus that we can get this done is because the reality is it is not rocket science -- we can get it done. mr. chairman, whether it is our current chairman, john larson, or our future chairman -- whoever gets to lead this caucus knows we have got an enthusiastic group of committed representatives of this country ready to get the job done. >> questions?

>> congressman, if republicans are willing to step up and raise revenue, will house democrats provide votes to cut benefits to programs like medicare and medicaid? >> let me say that clearly, as gene sperling was sent today, the president is willing to look at what they're going to put forward in terms of revenues, but that has not been forthcoming, shall we say. with the president has been very clear is in terms of the impact on beneficiaries and beneficiaries are the people who are the recipients of medicaid, medicare, and social security -- we believe at most would agree that social security is not responsible for the deficit and should not be on at

the table for discussion. with regard to the so-called entitlements -- i come from hartford, connecticut. this is a matter of insurance and it is a matter of actuarial assumptions. and i think when you look at things in terms of insurance and not entitlements, people were i come from say, wait a minute, i paid for this. that is my insurance that i paid for. now, there are actuarial assumptions you can make -- life span, various elements, wellness, exercise, preventative care. a number of things built into

the affordable care act that will allow us to reduce costs significantly. a perfect example -- reuters said in a 2009 more than $750 billion annually in inefficiencies, lack of coordination, waste, and fraud. for the first time in the nation's history, medicare crime superceded drug and prostitution crime. a report by reuters. chairman of aetna said, if there is $750 billion annual in terms of savings that could be achieved with the appropriate tools we have put forward, that does two things. it lowers the cost of health care and lowers the national debt. that is the driving force. so those are the parameters

where there can be -- i do not believe republicans want to see their beneficiaries, their recipients, in their communities lose their benefits. or be denied the benefits in this time. i think there is a common ground for us to work under that is both actuarially sound and focuses on insurance as opposed to an entitlement. >> let me add to that -- i say this having served on bowles- simpson fiscal commission that was appointed to deal with this deficit and debt crisis. i was fortunate or unfortunate enough to serve on the so- called super committee in congress to deal with this as well. and each time i got to serve on those -- everything should be on the table. if we're smart and sensible, we

will leave on the table to help us reduce the deficits the things that drove us into these datasets. as the chairman just said -- social security has never contributed one penny to these deficits. why to cut the benefits of seniors on social security to pay for the misspending and bad ideas of previous congresses, i do not understand. that is what we are adamant about social security -- use it to buy down a debt created by other things? no. on medicare, if you all just take a close look at the record, a lot of democrats lost their seats because of republicans politicizing this issue. democrats have already come to the table $700 billion in savings in medicare already. we have reformed medicare through be affordable care act, and much of it is doubling to play out. $700 billion -- that is a lot.

i have not seen any republicans come forward with a proposal that saves you $700 billion. we did that without having to cut any benefits for beneficiaries who earned as benefits. that was the beauty of the reforms we passed -- we found ways to extract savings, principally from waste and fraud, people out there are going after them. the chairman said there is a lot of money out there we can save. we saved over $700 billion. in the sequester, medicare is in the sequester. there will be savings from medicare in the sequester, but once again at the insistence of democrats, the savings will not come at the expense of seniors and other beneficiaries on medicare. medicare, has it been on the table? absolutely. but we have been smart with this -- we do not go after benefits for those who earn them. we try to make sure we get rid of the waste and overspending by those who are profiting from medicare.

and you can do that. the only thing democrats said is this -- we are willing to put everything on the table for discussion. but the moment you want to privatize social security or voucherize medicare or block medicaid -- we want to strengthen those programs. not let them die. if there is a clear difference the between republicans are willing to cut benefits for seniors and -- we can find savings in medicare, but we do not have to cut the benefits senior's earned when they paid for the medicare there are now receiving. >> did mr. sperling make any commitment not to raise the age of eligibility for medicare? >> we did not get into specifics. one of the things that he prefaced the comment with -- our caucus is always prone to ask a very direct and specific questions, as is the press. he said, i am not going to come up because of the open nature of this discussion and what is going on, the sensitivity, no

lines are being drawn in the sand. much as the chairman said, everything was on the table for discussion. the context and parameters as more eloquently outlined by our vice chairman. >> one of the caucus members tweeted that a discussion about why some of the republican proposals on bringing in tax revenues do not add up, the math does not work -- can you explain what he talked about? >> i think that was more of a discussion about how the republicans keep talking about doing something other than asking the wealthiest 2% to contribute more. we have never seen a proposal that actually adds up to anything. the question was posed, have you seen anything that adds up? what are the numbers? we do not know -- it should be one of those things for we ask

them to show us how they add up savings, how they would do that. we all know that the moment they start talking about going after some of these tax programs like the mortgage interest deduction, a charitable contributions, state and local tax deductions -- you are hitting middle-class americans. we're all still waiting for republicans to indicate how they would find that level of savings the president has called for by asking the wealthiest 2% of americans to contribute a little bit more. >> specifically, what would you guys cut? >> are you asking for savings or cuts? you are trying to save. >> i guess cuts -- are any entitlement programs on the table? >> those have been on the table through the sequestered. over $2 trillion there. i think when you say, is there

anything on the table you are willing to cut, the answer is yes, and very specifically, starting with reuters, there is $750 billion out there that needs to be extracted. what accounts for the rising cost in our deficit? what is the one area we need to focus on? health care. why is it so? it is at 17% of gross domestic product. the rest of the industrialized world who has universal health care is between 7% and 8%. switzerland is that 10%. switzerland has a private sector system, not unlike ours. except they have universal coverage and they do that at 10% of gdp.

so yes, here is where the cuts need to be made -- here is where they need to come from. if you are at 17% of gross domestic product because of the cost of medical devices, pharma, insurance, hospitals, doctors, and the trial bar, that is the area you need to take a look at and reduce those costs through cuts or changes in legislation that would both lower those costs, that is what he was talking about, what reuters was talking about. both makes health care more affordable and accessible and also lowers the national debt. the question is, for us, for democrats -- this is insurance that beneficiaries have paid into. this is something that they live on.

you know that an average female adult on social security earns between $12,000 and $14,000 a year. barely able to live on that -- clearly in a state like mine, very difficult to live on that kind of money. also, the services that are provided for people who receive medicare and medicaid -- i just lost my mother. i saw not only what she went through, but also what my neighbors and friends and family in that similar health care facility were experiencing. i know the importance and the value of insurance. when people say, you are cutting -- it is couched as

though it is an entitlement. do not tell them it is an entitlement. it was not something they saw deducted out of their paycheck every single week. add to that, my father's pension -- he never live long enough to collect it. everything he paid in all went in to go and pay for this, to pay for my mother's final days here on earth. thank god that we have a social safety net like that. and we do because of our experiences in the last century. social security during the depression, and then some many seniors bankrupt and because of lack of health care -- medicare and medicaid. now, with obamacare, we have all the tools we need here. let us work. here is our message -- obamacare is really romneycare, adopted on the model of

massachusetts. it will open up an exchange that allows for competition and allow for us to take what is the very best of government programs, what is the very best in private sector, and what is the very best from entrepreneurialism and innovation in our academic sector to drive down the cost, provide greater access, focus on wellness and individual responsibility and, we have got something that if we were together, becomes the greatest system in the world. in our reach. it is all right before us. it takes a collection of the best thinking and the best ideas from not only both parties, but from all sectors of our economy and our country.

that is where we need to focus on. but when you are staring at $750 billion annually, that clearly is the place where you are going to look to cut instead of on the backs of beneficiaries who have paid into an insurance program. >> you talked about how optimistic you are heading out of the meeting, but i have not personally heard any new information that may be optimistic about the chances of a deal. did gene sperling convey to you any particular piece of intimation that was the cause for that optimism? >> yes. if you go back, and i think xavier was right to say, look a context. go back to july of 2011 and as

the sessions were taking place in the white house, with respect to the fiscal cliff, subsequent meetings that took place in the select committee. i think there is far greater optimism because there is a true crisis on hand. everything that has been compressed into time and is awaiting before us. as he pointed out, comments today were very encouraging. the president remains very focused on this. he is taking that message out. i think it will take a matter of making sure that the business community ways in, that the academic community, the labor community, and the public in general does everything at stake here.

and i do believe that congress will respond in a positive way. we all have our concerns. you have heard them outlined today by the vice chair himself. i am sure the republicans have their concerns as well. but i do think and remain optimistic that there is a great opportunity here for us to succeed. not by moving away from the core values that we stand for, but by embracing what we all now we agree on. >> can i add real quickly, you had to be in the room, first, because you have to see the enthusiasm that is in there. a lot of it is driven by these new members to have a get it done attitude. i do not think they look at this as a place that cannot work -- they cannot work.

well over the last two years many of us experienced this morass where we would watch and wait for republicans to lead and they could not get there. they always needed democratic votes to pass the bills -- this new crop of elected representatives believes we will get something done. i think gene sperling did a clear job of setting the landscape we face for the next five weeks. not that he gave a road map, but the landscape is very clear. the great thing is because it is arithmetic and not rocket science, you can see the road, how you get there. and perhaps the reason i at least feel very optimistic is that i think the president has really gelled on what he wants to do. because of that and because he

campaigned on this and won an election, i can not see has the force of the american people behind him, as all the polls keep showing. two-thirds approaches balanced approach against the republican approach. more than 60% support asking the wealthiest 2% to pay a little more on taxes. having been on these committees to come up with a solution, there are only so many maps you can come up with that really work. so the smart, sensible, balanced approach -- it is in front of us. that we are starting to see what we used to call republican trickle-down economics -- maybe this is trickle-down politics. you see trickles of republican starting to break away from the special interest pledge to grover norquist -- may be one nasty real participation on the part of republicans to participate in a balanced plan that gets us where we need to go. >> thank you all.

>> president obama urged congress today to extend middle- class tax cuts and avoid the fiscal cliff. he spoke of the eisenhower executive office building for about 10 minutes. he travels to a call factory in pennsylvania earlier this week to talk about taxes and the economy. >> thank you very much. everybody please have a seat -- except you guys. [laughter] good morning, everybody. there has been a lot of talk here in washington about the deadlines we are facing on taxes and deficits. these deadlines are going to be coming up very soon in the coming weeks. but today's important because i want to make sure everybody understands that this is not just about numbers. it is a set of major decisions

that are going to expect millions of families all across this country in very significant ways, and their voices, the voices of the american people, have to be part of this debate. so i asked some friends of mine to join me, some folks from here in the area. our ultimate goal is an agreement that gets our long term deficit under control in a way that is fair and balanced. that kind of agreement would be good for our businesses, our economy, our children's future. i believe both parties can agree on a framework that does that in the coming weeks. my hope is to get this done before christmas. but the place where we already had complete agreement, right now, is on middle-class tax cues.

we have a two choices -- if congress does not act, every family in america will automatically see taxes go up at the beginning of next year. every family in america will see their taxes go up starting january 1. a typical middle-class family of four would see income-tax is go up by $2,200. $2,200 out of people's pockets. less money for buying groceries, less money for prescriptions, less money for buying diapers. it means a tougher choice between paying the rent and pay tuition. middle-class families cannot afford that right now. by the way, businesses cannot afford it, either. yesterday i sat down with small- business owners to stress this point -- but economists predict that if taxes go up on the middle-class next year, consumers will spend nearly $200

billion last on things like cars and clothes and furniture. that obviously means fewer customers. that cuts into profits. that makes business is less likely to invest and hire, which means fewer jobs. that can drag our entire economy down. the good news is there is a better option -- right now, as we speak, congress can pass a law that would prevent a tax hike, the first $250,000 of everybody's income. everybody -- that means that 98% of america and 97% of small businesses would not see their taxes go up by a single dime. 98% of americans, a 97% of small businesses would not see their income taxes increased. even the wealthiest americans would still get a tax cut, the

first $250,000 of their income. it is not like folks who make more than that are not getting a tax break -- they are getting a first tax break -- tax break on the first to order to keep thousand dollars and everybody else. families and small businesses will be able to enjoy some peace of mind heading into christmas and the new year. it will give us more time next year to work together on a comprehensive plan to bring down our deficits, streamline our tax system, and do it in a balanced way. including asking the wealthiest americans to pay a little more so we can still invest in things like education and training in science and research. i know some of this may sound familiar to you. we talked a lot about this during the campaign. this should not be a surprise to anybody. this was a major debate in the presidential campaign and congressional campaigns across the country. a clear majority of americans --

not just democrats, but also a lot of republicans and a lot of independents, agreed we should have a balanced approach to deficit reduction that does not hurt the economy and middle- class families. i am glad to see the you have been reading the papers lately -- more and more republicans in congress seem to be agreeing with this idea we should have a balanced approach. both parties agree we should not raise taxes on middle-class families. let's begin our work with what we agree. the senate has passed a bill that keeps income-tax is from going up on the middle-class families. democrats in the house are willing to vote for that same bill today. if we can get a few house republicans to agree as well, i will sign this bill as soon as congress sends it my way. i have to repeat -- i have a pen. i'm ready to sign it. [applause]

so much point here today -- let's approach this problem with the middle-class in mind. the folks who are behind me. the millions of people across the country do they represent. the american people are watching what we do. middle-class families, folks working hard to get into the middle class, they are watching what we do right now. one thing i have learned, when the american people speak loudly enough, congress listens. some of you may remember that a year ago during our last big fight to protect middle-class families, tens of thousands of working americans called, tweeted, and emailed their representatives asking them to do the right thing. sure enough, it worked. the same thing happened earlier when college students stood up and demanded congress keep rates low on their student loans. congress got the message loud and clear and they make sure

that interest rates on student loans did not go up. the lesson is that when enough people get involved we have a pretty good track record of actually making congress work. that is important. this is our biggest challenge yet -- is one we can only meet together. in the interest of making sure that everybody makes their voices heard, last week we asked people to tell us what a $2,000 tax hike would mean for them. some families told us it would make it more difficult for them to send their kids to college. others said it would make it tougher for them to cover the costs of prescription drugs. some said it would make it tough for them to make their mortgage. someone here from newport news -- she just wants to see cooperation in washington. she wrote, let's show the rest of the world we are adults and living in a democracy we can solve our problems by working

together. that is what this debate is all about. that is why it is so important that as many americans as possible send a message that we need to keep moving forward. so today i am asking congress to listen to the people know sent us here to serve. i am asking americans all across the country to make your voice heard. tell members of congress what a $2,000 htax hike would mean to you. call your members of congress, right in e-mail, posted on their facebook walls. you can tweak it using the hashtag #my2k. we figured that would make it easier to remember. i would like to insure the american people i am doing my part -- i am sitting down with ceo's, with labor leaders, talking to leaders in congress. i am ready and able and willing

and excited to go ahead and get this issue resolved in a bipartisan fashion so that american families, american businesses, have some certainty going into next year. we can do it in a balanced and fair way, but our first job is to make sure taxes on middle- class families do not go up. we all theoretically agree on that, so we should go ahead and get that done. [applause] we get that done, a lot of the other stuff is going to be easier. in light of spreading this message, i am going to be visiting pennsylvania on friday to talk with folks in small business there that are trying to make sure that they are filling their christmas orders. i will go anywhere and do whatever it takes to get this done. it is too important for washington to screw this up. now is the time for us to work on what we all agreed to --

let's keep middle-class taxes low. that's with the economy needs. that's what american people deserve. if we get this part of it right, then a lot of the other issues surrounding deficit-reduction in a fair and balanced responsible way are going to be a whole lot easier. if we get this wrong, the economy is going to go south. it will be much more difficult for us to balance our budget and deal with our deficit because if the economy is not strong that means more money is going out, things like unemployment insurance, less money is coming in in terms of tax receipts. it makes our deficit worse. we really need to get this right. i can only do it with the help of the american people. using #my2k or email, post it on a member of congress's facebook wall.

we do not have a lot of time here -- with a few weeks to get it done. we could get it done tomorrow. optimistically, i do not think we are going to get it done tomorrow. but i tell you, if everybody here goes out of their way to make their voices heard and spread the word to their friends and families and co-workers neighbors, i am confident we will get it done. and you'll get america on the right track, not despite next year but for many years to come. thank you very much, everybody. [applause] ♪

>[no audio] >> tomorrow on "washington journal," a guest from national public radio discusses the health-care law and potential hurdles in congress and state courts. then reuters correspondents look at the tax cut enacted in 2010 ended a plan to extend it. then, more on the payroll tax cut with william mcbride and sf hamlin -- and seth hamlin. they will discuss the impact of the cut on the current economy.

"washington journal," live thursday at 7:00 a.m. eastern on c-span. >> the authors of the simpson- bowles debt reduction plan talk about the fiscal cliff and choices facing congress. both alan simpson and erskine bowles have emphasized the need for revenue increases and entitlement reform. they have urged congress to reach a compromise. this is hosted by the "christian science monitor." >> here we go. our guest this morning are erskine bowles and senator alan simpson, a co-chairman of the national commission on fiscal responsibility and reform and co-founders of the campaign to fix the debt or as the new york times called them this morning, the debt duo. their last joint appearance with us was in november of 2010. let me thank them both for a much for coming back. we're all trying to fix the

nation's fiscal woes. erskine bowles is president the university of north carolina. he also had a career in investment banking and venture capital. the team in washington in 1993 service director of the small business administration and was later mentioned -- named chief of staff to president alan simpson clintonala followed his father's footsteps into -- president clinton. alan simpson of his footsteps -- a u.s. senator. a law degree from the university of wyoming -- he was elected to the legislature in 1964 and the u.s. senate in 1978 where he served three terms and was elected as majority leader. leaving the senate, he has been director of the institute of politics at harvard and has practiced law. he is the author of the book "a lifetime of scrapping."

now on to the process -- the breakfast is being underwritten by areva, a growing player in renewable energy and nuclear energy. we thank them for their support. as always, we are on the record here. please no live blogging or other means of filing -- to be some time to think. there is no embargo it said c- span has agreed not to air the video of the breakfast until noon today to give those of you who actually paid to attend the breakfast time to file./ finally, if you'd like to ask a question please do the traditional thing as ms. subtle, nonthreatening signal. -- send me a subtle, nonthreatening signal. with that, thanks again from our supporters and yours. >> he always goes first.

the times article was right about one thing -- thingdebt if you want to know we're really like, you can imagine sonny and cher, you can not imagine which one i am. somebody once asked me, what was it like to be president of a university? i said it is like being ceo of a cemetery. you have lots of people underneath you. i thought i would update you -- yesterday i had a meeting with a group of ceo's that we took in to meet with the white house economic team and i subsequently

had a meeting with president obama. i came away from those meetings feeling that these guys really were serious about the debt. they were serious about reducing the deficit and the need to get on with it and had some sense of urgency. they were serious about raising revenue from higher income tax payers, and that includes raising rates, with some flexibility there. they were serious about reducing spending and i would say to you wall, you have written a lot about the tax side of the equation. we need to read more about the spending side of the equation. they are equally important if we are going to get a balanced plan. they're serious about reducing spending -- that would include reducing spending on health care entitlements. they're serious about

protecting a class -- you can really feel the president's passion on that. they were serious about restoring confidence in the short and long term so our economy can grow and create jobs. i think the president has always been for a balanced approach come as alan and i have. our message to the president and the congress from day one has been the same -- that is the problem is real, the solutions are painful, and there is not going to be an easy way the only way to solve it will be a balanced plan with cutting spending and one without the other will not work. where do i think we are? i am really worried. i believe the probability is we are going over the cliff. i think that would be horrible. it would be devastating to the economy.

it particularly bothers me, given the fact i believe this is the magic moment -- if we are ever going to get a deal done the time to do it -- we have got a republican speaker who has been willing to put revenues on the table. we have republicans and democrats who have said we ought to have a balanced plan. most importantly, to get something done here in town, you have got to have a crisis. we have got one. we have got a real crisis in this fiscal cliff. i think it would be insane. i think there is a one-third possibility we will get something done before december 31. you all know what it means if we

do not. if we go over the cliff, i think you will see economic growth slowed by as much as 3%. i think that is enough to put us back into recession. it will throw another 2 million people out of work. unemployment will go to 9%. i guarantee you the members of congress and the president's economic team will hear from the business community today that they are already slow in hiring. they are already slowing investing in capital expenditure. you will see this begin to affect the consumer, consumer confidence will erode. they do not think we would be stupid enough to do that. if we do go over the cliff, you will see the stock market's

really crash. we will get a downgrade in our credit from moody's and fitc. i am for getting a deal done and done now. and done right. where do i see the sticking points today? the president wants $1.50 trillion in revenues as part of his deal. in the revenue package, he wants to see rate increases on the top 2%. he has some flexibility there. he has a real reason why he wants to see the increase in rates. that revenue, when you get to the congress and talk about reducing tax expenditures, every university says, all you will

take away reductions. republicans want less revenues and none from rates and all from simplifying the code. the other thing that worries me about the sticking point is there have been no serious discussions yet about entitlements cuts reform except that the president has $325 billion in his budget of health care cuts. that is not enough to slow the rate of health care to the rate of growth of the economy. we can do this. i think we must do it. it is my generation that screwed this up. we have got to be the one who fix it. i include in my generation those of you who sit at this table. we have all got some. i do not care if you are republican or democrat, a

reporter " -- a reporter or a political person. the chances are about one-third we will get it done in the lame duck. another third that we will go over the cliff. that will be bad because we already experienced a lot of those, you will see a number of those in the fourth quarter, the affect of what is happening. the real problem is if we go over the cliff and we do not get a deal right away, that is also a one-third probability that will lead to chaos. that is where i think it stands now. we will do whatever we can to bring about the honorable compromise it takes to get a deal done that makes sense for the country that faces in these changes so we do not disrupt economic recovery, but we do put

our fiscal house in order. >> thank you. a great privilege and honor to do this. through the years, gene would call and i was a freshman u.s. senator. when i got the call for the breakfast, i tell you, my staff was cheered that i had a neighbor -- had been able to get someone to listen. that is important. working with erskine bowles is a joy. he is smart. he is the last guy on earth to balance the budget of the united states when he was chief of staff for bill clinton. he knows the game. he is a master negotiator. >> you are wearing me out. [laughter]

>> i am older than you. it is a great privilege. what i am fascinated by, when this report came out, it was deafening. what are these guys doing? they are talking about revenues, spending cuts, and we sat in that room for seven months, and we come out with five democrats and five republicans and one independent, and if you do not think that is tough to get a range like that, you do not know anything about meetings or conferences or commissions. that is what we have got. across the street was the national association of realtors. i live with a realtor. she is not doing that anymore. she was a good lobbyist.

she was tremendous. they just chuckled. home mortgage interest deduction? you guys are stupid. you will get rid of us. we do not get rid of it. take it from $1 million to $500,000. give everyone else a 12% non refundable tax credit. helps the little guy that everybody talks about. everything we did is set this, get rid of that, just remember these tax expenditures that 20% of the american people use 80% of. guess who is using them. a guy who got the best lobbyist? the best deal? they went in and cut the deal. only 27% of the american people itemize.

three-fourths of the american people never heard of these things. they take $1 trillion, $100 billion a year, and suck it out of the economy. we need a stimulus. what the hell think a $1 trillion deficit is? once people wake up as to what is really coming, they will savage us and the commission. do not think these interest groups are not whoring it out right now. >> we came from the witness protection program. [laughter] >> it is tough to tell people what is going on when you have a presidential debate and during

the course of that, no one asked anybody what they were going to do about the long-term solvency and social security for 75 years. if you do nothing, which is the glorious recommendation of the aarp and other senior groups, that in the year 2031, you will waddle up to the window and get a check for 25% less. who is goofy enough to let that happen? plenty of people. you have never heard a single question, what will you do with a $16 trillion debt? a question i thought was rather significant. >> the word fiscal cliff was never mentioned by candidates or one of the moderators in the

debates. every day, we have a countdown. we already elected to die. -- the guy. it has to be dealt with on its own level by its own party. it is not part of solving the deficit by hitting social security and hurting seniors. .t's sits by its side finally, it seems to me and my goofy attitude about life around here, that the sad part -- when you have leaders of both parties throwing out, casting out into the water the bait that says, maybe it would help the democrats if we go off the cliff. the other side, maybe it will help the republicans if we go off the cliff. i will tell you, that is like putting your country. -- betting your country.

anybody who has that attitude, they are really missing the boat. any government representative that does not realize he or she is an american first, instead of a guy raking it in and sticking the tax code which goes only 20% of the american people, then you have a real problem in america. as long as we are in the throne of growth will nw -- grover norquist.er >> according to press reports, not talking on the phone since saturday while the white house line.sy launching a new on-lin

>> back in 1996, president clinton brought me back to negotiate the balanced budget. i met with people who were smart, and nobody believed it could be done and nobody believed we could make progress. some of you were here when it happened. we were having constant meetings with them that not everybody was aware of to advance the ball. i can guarantee you there is no question in my mind the white house is serious about getting something done. i wish the discussions have started earlier. if you are at a corporation and had $7.20 trillion hitting your balance sheet at the end of the year, would you have started working on it in mid november?

no, you would have been working on it all year long. we have the people in washington ready to turn their attention to it and they see their crisis coming. i believe they will get together and have these negotiations. there are only 10 working days laeft. if this were in the real world and we have 45 days left in the year, you would use every one of those to work on this. you would not be going home for thanksgiving. you would be working on this every night and weekend. work onthe people will sa this and get it done. if we go over this fiscal cliff, you have that the country -- bewt the country. it can lead to really high unemployment.

another 2 million people losing jobs. corporations will slow hiring, stop their capital expenditures, and i think you will see adverse affects run throughout the economy. why take that chance when we do not have to? all we have to do is come together and make sensible compromises on this deal. it was dick durbin who continually asked, where is the tipping point? that came every week. he deserves a medal of honor. he has more guts. he will get punished in his party. they will pick on him. there are people waiting to take his job to do nothing to help. -- who do nothing to help.

the tipping point is unknown. it is going to come from people who have loaned us $16 trillion. half of it is private. half is public. half is china. the tipping point will come when they see a totally on functional government kicking the can down the road. it is a 55 gallon drum filled with explosives. you have a group called the can kicks back. look them up. they are a great group. they are addicted to money. and borrowing. we will give it to you but we want more money for our money. inflation will kick in. interest rates will kick up. guess who gets it the worst.

the little guy. what is this battle about the middle class? who will get bruised the most? the money guys will always take care of themselves. if we are spending $1 trillion a year on interest and health care costs continue to grow significantly faster than the economy, all of these things of my party loves so america can be competitive, taking care of the truly disadvantaged, with proper support for things like food stamps and unemployment compensation and ssi, having enough money to take care, there will not be any money there. it will all be consumed by the entitlement programs and interest on the debt. doing nothing is not an option.

>> i am dying to ask another question. we will go to kevin. >> [indiscernible] when do you except the position of treasurer garrett -- treasury a secretary? when will it be announced? have you been asked? more broadly, both of you, with 30 million escorts, how difficult is it to solve the tax issue and this question of corporate tax reform? has it morphed into something was?rent than in what it wawhat windmills have been laid out already.

everybody seems to be staking out their turf. unrelated, are you related to paul bowles, the writer? >> i can answer really quickly. i am not a candidate for any job working for anybody anywhere. i am 67 years old. i have been married 42 years. i live with my wife 22 of those and the rest of the time i have been on the road. i am going home to charlotte and i will stay there. i will do anything i can on a part-time basis to help anybody where my hope is helping. -- help is helping. i am not taking any jobs nor do i think i would be the right person to be offered it. there are a lot people for that job. as far as the corporations and

the senator staking out turf for windmills, everybody is like my mama. she says, she is 92 years old, you are doing all the right things, you are fiscally conservative, you are putting the nation's fiscal health in order, but do not mess with my health care. we are all like that. set aside the one thing that is important to us. everything has got to be on the table. i think there is a way to handle the corporation situation. we want small businesses to be into growth. new business starts are at a 30- year decline. >> ok. >> thank you. you both spoke eloquently of compromise.

back to the last time you were at the monitor breakfast, that was something that included the tax reform lowered marginal rates involving the tax space. that was the basis for the senator's compromise. he says we will produce $4.50 trillion in revenue and also have a cap on donations from the rich, $500,000. what is your opinion of those compromises? >> you have to give them credit for putting out a plan. we finally got so exhausted in the commission with people objecting to this or that that we came to what was called the per-share overrulrule.

instead of sitting there bitching, put in a plan. they were dazzling, some of them. but put in a plan. that is allmpromise, to thin we did. kennedy and i did immigration, lots of stuff together. i love the virginity of some in my party. they are rigid as a fireplace poker without the occasional warmth. [laughter] the constitutional convention lasted weeks. the declaration of independence,

when jefferson drag it out, go look at the original copy. everybody started to change it. he finally broke what today would -- he finally wrote twhat we would call today, "wathev hatever." if you go to a legislative body and you cannot compromise, you should never be in a legislature. you should never marry. [laughter] >> the republican house leadership has been putting forward testimony you gave from a super committee in which you spoke of an $800 billion price tag for new revenues and you generally seem to build around speaker boehner's offer to president obama.

that is a bold plan. could you talk about that? >> a bunch of the american people are -- it is so frustrating for these guys. i was listening. i did not have inside information. we were listening to this. i said, these guys can get together and do a deal if they want to. the idea there was to set out and prove to them, you can do a deal. i took the midpoint of where they were in every category of spending. as an example on discretionary spending, they were between $250 billion and $400 billion. i said, take $300 billion. on health care, on other

mandatory, cpi, to gather it was $200 billion. in trust, about $400 billion. $1.80 trillion worth of spending cuts. you add that to the $1.30 trillion already done, that is $3.10 trillion. you take the speaker and the president on revenue, three- point $9 trillion -- $3.90 trillion. it does not change the fact that we have got to make social security sustainably solvent. we have got to form a task -- reform a tax code and simplify it to make it more competitive in a global marketplace spirit it was a good start. that was the point i was trying to make.

>> you mentioned some flexibility. can you explain what you mean by flexibility? >> i heard it. i do not think they would have said it to this group if it was not real. i heard it not only from the team but from the president. they talk about, this deal will not get done with both sides being absolutist. it must not be a real word, because i cannot spell it right. they are going to have to be compromising on both sides. the white house really believes

to its core that the revenue ought to come from the wealthy. i have not met a single wealthy person who is not willing to pay more in revenue. i have not. not one. that includes me. or even to pay higher rates in most cases. the white house wants to make sure that revenue comes in, that it is real. their belief is the only way you can make it real is to have it in the form of higher rates. it does not all have to come out in the form of higher rates. some of it could come out in the form of deductions. as an example, it is a great theory that you get rid of all of these tax expenditures. you try to get rid of the charitable production, and you

want to unite the rich and the poor, the universities and hospitals, so maybe you would not get it done. you would end up excluding some form of it. if you lived in a high tax state and you want to do something on these mortgage interest deductions, state local taxes, you might end up having compromise. he wants to make sure it is a real. he is not opposed to some of it in the form of tax expenditures, but he wants some portion of it in the form of higher rates on the top 2% so the revenue is there. the conservatives are saying, i guess i could do that, but i do not want to see it "wasted," to

blow to government -- bloat government. if they are assured, even the constituents will understand what will happen. >> he knows. one of the things that was said by one of the members of the economic team, they know they cannot be the naked stand-alone. >> you can tell the difference. if you are naked, you do not have any clothes on. if you are "naked," you do not have any clothes on and you are up to something. [laughter]

>> [indiscernible] the nation pauses creditor, they thought the government could not function. a week by week but mess on the capacity to compromise. on the miss -- litmus capacity to compromise. [indiscernible] >> i think it has. there is nothing new under the sun as to what we did when we started december 1, 2010. the tipping point is real. it could be two years. it could be three straight

months. when it comes, the money guys, a lot of things go with it. i do not get all of the elements of panic that go with that. when people in good conscience say, i think we can get this done, with a constitutional amendment to balance the budget, for get it. it is a nice idea. you have got six or eight years, and you do not have six or eight years to mess around. there is no time to do it. a nice idea. flea sterile in practicality. the sterile and practicality -- sterile in practicality.

>> for me, i like that fact. i hope i never see an0other article talking about title

reform. >> if they come up with a solution, what would be the consequences on the economy? is there anything is there that should be part of the agreement?

>> from my viewpoint, there is a one-third probability we will get it done. the business people i talk to, they do not act like that is not without consequences. it is. we are already taking actions. you will see those show up. we have not started firing people yet, but we are not replacing people. we have slowed our capital expenditures but not stopped them. we are taking actions that have an adverse affect on the economy. -- effect on the economy. it is not without its own negative consequences. it is not as bad as having real chaos.

if they decide in washington hey will play small ball -- about $90 billion, you have to fix the aap, and we will do the fix, that is about $220. does that solve anything? it does not. you go over the cliff, and you have not done anything to make the tax code more globally competitive. you have not done anything to slow the rate of growth of health care. that is going to eat the budget of life. you have not done anything to make social security sustainably

solvent. you have not addressed the dreaded debt ceiling. you bet your life when the ceiling comes up, when you have not done any of that stuff, you talk about the leopard's changing in this town pretty quickly. -- leverage changing in this town pretty quickly. confidence in the marketplace is a big deal. >> there is another thing. they do not have to come out here with a piece of legislation right now. that would be great. they need to come out with a sheet of paper signed by an equal number of democrats and republicans from each house, were put the close -- or pretty close. something that shows both parties were deeply involved in .he plan an

does not have to be big words. it has to be solved by both parties. if you did that -- signed by both parties. write it on one sheet of paper. here is what we will do. here is the fail-safe. here is the trigger. we will do this and this. signed by an equal number of democrats and republicans, which will relieve the anxiety of the country, the creditors, the people who are out there. i heard years ago, small ideas have no power to inspire. the american people are waiting to be inspired. they are thirsting for somebody to tell them the truth. we often say, pull up a chair.

at the end, they are thirsting for somebody to tell them the truth, instead of the hogwash from both parties. anybody can discern they are largely b.s. >> if we kick the can down the road or do something that is not real, it will not fool you. it will not fool the american people or the markets. whatever we do, we have a lame duck, it is a framework deal, it has to be real, ask to have real clarity, substance, a real down payment, both revenue and intent cuts, it has to have a

timeline. it does not get easier. it gets harder. you are going to have to have a fail-safe provision. it is not like the one was had with the sequestered. acceptable.hat is i think you will have to solve this debt ceiling issue as part of this deal. >> [indiscernible] a political decision. there were 10 members [indiscernible] they voted against simpson-

bowles. [indiscernible] you said -- [indiscernible] i do not see that tom has had parades' thrown in his honor. [indiscernible] paul ryan goes the other way. give a dynamic of where we are right now. the final question is why is it simpson-bowles and not bowles- simpson? >> i will take the latter first. the reason is not bowles-simpson

is the acronym for that is not appropriate. [laughter] simpson-bowles means son of a bitch, so it makes no difference. this council and others, it is to back these guys up who have the guts to do this. no one knows politics better than you. we have worked together for years. there is a political price. these groups will begin to circle. we will raise more bucks to be right there at their backs until our backs cave in. if the tipping point comes and we go over the cliff, the people in america who are looking around when they go to borrow money to send their kid to

community college and it has gone up 2% interest rates, they will say, who did this? what a jerk allow this to happen? they will say, you were the rigid one who would never do anything and we will take it out on you. i hope it does happen. i think the guys who have the guts to go big or go home, we will protect them. being any thoughtful american, that is where we are right now. we are pretty optimistic i tell . durbin will take heavy pounding. so will the rest. they all go home. the good ones have town meetings and speak for five minutes and stay for two hours and let people showed them.

-- show them. i have done that for years. they will say, i did not agree with you at all but you came in and ask questions. i will continue to do that the rest of my days. i always did. did you hear what joe biden said? i said, what did he say. ? they say, he got his foot in his mouth. i say, i have done it more. we have got to be who we are and take the stuff. >> the best part about spending the last two years on the road with this american treasurer is we have gone to see liberal

groups, conservative groups, business people, ordinary citizens, every stripe you can imagine, we have had a chance to talk to. we have had a chance to educate a lot of people about what the real problem is. i think you are right. there has been no punishment. i think people are ahead of politicians. that often happens. if they appreciate anything about what al and i have done, it is that we have been honest with them. there is no easy way out. they ask us what we need to cut and we were very specific. the defense department has to be there. we have been very specific about reforming the entitlement programs and making the real cuts.

not cuts for things dick durbin would say. there are things he hated wors e than the devil. we were candid about the tax code. at the end of every time we talk, without exception, we get a standing ovation. they are desperate for somebody to tell them the truth. that and other things other people have done are beginning effect. a real facdefe the politicians who think they can get away with ducking the issue or taking a pass. >> follow up on your one-third comment. can you elaborate

[indiscernible] the negotiations, the amount of deviation from party lines, why are you saying that? can you react to the white house this week [indiscernible] we do not look at that. >> yes, sir. -- sure. most of one-third probability we will get something done before the lame duck. at least one-third. i would not put me down in the optimistic target -- category. i think it is critical for the country. the pace of the negotiations, these guys will be in town 10 more legislative days. there is a lot to be done. if this were any business or family, if they had a problem as big as this, they would have

been working all year together. that is number one. two, it is still a part. there is still a bridge we have to close. can we close it in two hours? if you put dick durbin and tom in a room, and say, you cannot come out until you have got a deal, those two people, as far apart as they are philosophically, they would cut a deal. they are the guys who put their careers on the line to support this. your question about social security, i do not think people are taking social security off the table. what they do not want to see is social security being reformed in order to reduce the deficit. they want to see social security reform to save social security to make sure it is sustainably

salt and for the next generation -- solvent for the next generation. i think it is a parallel process, but it would not be done as part of the deficit reduction, but you would still be focused on getting social security for the long-term 75 years solvency. if you cannot take a system that has a life expectancy of 63 with a retirement of 65, and you now have a life expectancy of 78.1, and you cannot do something about it by raising the retirement age by the year 2050 without shrieking from the senior organizations, well, they will. unless they have rocks for brains. this will be 67 retirement in 2027. that is present law.

we put together a package which takes care of the lowest 20% of society. giving the older from 80 to 85, giving them an extra 1%. keep going if you want. change the cost of living allowance. do some things to make the rich pay more or less pay less -- and the last pay less. -- and the less pay less. the system is $900 billion in negative cash flow in the next years. how unfair is that from these groups? there it is. >> let me close. people want to ask questions. i want you to have a chance to respond to a critic. natalie, the nobel laureate, has been describing your work.

she says, despite years of dire warnings from people like alan simpson, we are not facing any kind of fiscal crisis. u.s. borrowing costs are at historical lows with investors willing to pay the government. reducing the budget deficit is not the top priority for america at the moment. creating jobs is. your response? >> you are more calm than i am. you can respond to that. know who the hell i am. he savaged me from the beginning. i notice when he goes on the talk shows, nobody listens to him. that must have some bearing. [laughter]

he has been consistently critical of our efforts. what he has not focused on is what we really have proposed. just look at the two guiding principles. one was that we did not want to do anything that would disrupt the very fragile economic recovery. so we phase in our recommendations over a long time. the u.k. did a lot of the same things we did, but they did too much too quickly. therefore, it led to, the austerity led to a contraction in the economy. you have to spread it out over a much longer period of time. the second point i would make is that the second principle we have is that we did not want to do anything that would hurt the

truly disadvantaged. if you look at our plan, we do not have any cuts. food stamps, ssi, unemployment insurance, social security, we raised the minimum payment. we gave people between 81 and 86. every democrat told us the private pension plans run out and we need extra help. we try to do the right things. it does not mean some of the things we are recommending are not painful, but they have to be. the problem is real. we have tried to make every recommendation made when it comes to revenues so the task code would not be less progressive than it is today. we are willing to, that is part of a recommendation. we believe people in my income tax bracket have got to pay

more, whether it come from reducing rates and reducing tax expenditure or raising rates, so i think, if you look at its and you are worried about the future of the country, you know you cannot continue item for item forever with annual deficits of over $1 trillion a year. compound interests will kill you. if interest rates were at the same level they were in the 1990's, the median level, or the first decade of this century, we would be spending $650 billion on interest. we only taken $1.30 trillion in total income tax revenue. if you want to put it on a relative basis, $230 billion in interest today is more than we spend, the department of

commerce, education energy, homeland's security, interior justice, and state combined. it is a big deal. if you are concerned again about making the investment paul wants to make sure we make in education and infrastructure, you have got to slow the rate of growth in those areas and raise revenues. take revenues from people like me. i realize there is a debt and deficit problem. merry christmas. [laughter] >> we have run out of time. we want to thank you both so much for making time for us. >> thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> to find out more and watched

the events on deficit reduction and tax negotiations, we have created a special website where you can watch a video from capitol hill and the white house and read the latest fiscal cliff tweets. >> we have military-run schools. it is $50,000. almost four times what the rest

of public education costs. the vast majority of our bases, we use public schools. we could take the money we are spending today, pay every public school system 14,000 per child, and save billions of dollars per year. and with the same or better outcomes. >> you can talk with the oklahoma senator about the fiscal cliff, affordable care at, and the future of the republican party on bootv. -- booktv. join our conversation live sunday at noon eastern. >> now we will hear from grover

norquist. the president has said was the bush tax cuts to expire on the top 2% of income earners. this is one hour. >> thank you for coming out so early. we appreciate it two weeks in a row. we will have another one next wednesday. we appreciate you being here. we are excited to have grover norquist. welcome to all of you in c-span landed, people following on twitter. we want to thank the bank of america for supporting the series -- the forum's about the issues that matter the most in washington. last week we talked about how the obama campaign one. this week we will talk about an

important issue for conservatives and republicans. we appreciate bank of america's partnership throughout. we are going to bring you into the conversation. good morning, grover norquist. thank you very much. grover is very attached to his bad. >> they told me it was to streamline appeared for the bag. thank you for coming up. can republicans raise taxes?

>> it is difficult. >> so not know? >> close to know. the republicans have built a brand as a party that will not raise your taxes. the pledge does not change over time, it does not change across state lines. in the past it was difficult to say to somebody, oh, i will not raise your taxes. why would we not believe you. the democrat also said it is not the time to raise taxes. the pledge it takes the weasel words out and says, i will go to the state capital, the legislators, congressman, i will reform government. it tells you an awful lot of what you want to know about an elected the official if they make that commitment in writing because they cannot take it back. >> when republicans are running, you always get them on record.

98% have signed it. 93% of the incoming house republican incoming congressman. people used to be afraid of you. on "the colbert report," they had a lightning bolt. are you frosty, melting, losing your power before our very eyes? >> one is the scenario that republicans were afraid for americans for tax reform and took the pledge because i told them to. that is colbert territory, harry reid. that's nonsense. people take the pledge. the reason why most republicans and handful of democrats take the pledge is they don't intend to raise taxes. we send the pledge out in the mail and people make that commitment and make it part of their campaign. >> if you are running in a republican primary, it would be

difficult to run in a republican primary without sin signing it. does someone come to you and look for a way out? >> what you generally have is, you have a complicated bill which has a lot of moving parts, does it raise taxes? it's pretty clear in most cases. the important part of the pledge is it allows people to credibly commit they aren't going to raise taxes and people know who and what they are. boehner and mcconnell have governed easily. they aren't going to raise taxes and allowed the republican governors or the 24 states with a republican governor and republican legislature, depending on how you count new york, 13, 14 states have a democratic governor and house and senate and there you see the red states are not raising taxes.

they are cutting taxes and the blue states are raising taxes rather than reforming government. the fight we are having in washington where there's gridlock in the states you have the opposite of gridlock for the last two years. there was an article about it last week true for two years, legislators in the various states that you've got 24 states where the republicans get together and turn their state into hong kong or texas and maybe 14 states where the democrats can turn their states into greece or california. >> the wording goes back to 1986. >> part of passing the 1986 bill, we did it as americans for tax reform. >> the wording of the pledge hasn't changed. in 1986 when people first signed that pledge, the federal budget deficit was $220 billion. this year, $1.1 trillion, how

can you say nothing has changed? >> lots have changed. bush focused not on spending. the pledge only does certain things. the pledge makes tax increases more difficult at the state level, at the national level. you haven't had a republican vote for income tax since 1990 when bush threw away his presidency. 1993 tax increase, only on democratic votes. then no tax increases until 2009 when obama came in and raised taxes with obamacare. >> isn't this -- you are having republican is take a difficult pledge to cut taxes, isn't that like a quarterback saying they like taxes? --passes?

>> it's a pledge not to increase taxes. people say why don't you toughen it. you don't want to change it because it is a simple guardrail. it doesn't solve the world's problems, it says no net tax increase. >> in your mind when someone signs it, how long are they committed to it? >> in writing when the person signs it as long as you are a congressman or senator. >> you are signing this for life? >> unless you intend to be a congressman for all of your life. >> a career decision. >> if someone tells you they are pro-life or pro-choice, is this 18 months or a year? how long are you pro-choice? you are telling someone who you are. i'm the kind of guy who is pro- choice or pro-life. two people have brought that up. latourette who decided to leave congress he said yeah i made

that promise a long time ago and i went into district and talked about banks and mortgage. mortgage, that was 20 years ago. you are still sending me letters. people make a commitment. it's an easy simple commitment and reid doesn't understand because he doesn't share that principle. the government's too big now, we don't want it to get any bigger. why would you give it more money. all of the effort by obama to raise taxes is to expand government, to backfill the increase in government, he wants to make it a permanent increase and needs to raise taxes to do it. and the fact that republicans have said no -- and he could have done it in 2009, 2010. all this stuff wanting to raise taxes on the rich?

he could have done it in 2009 but he didn't. >> let's break down the current situation. politico had he an astonishing story about tom cole, one of the craftiest operators in congress, former chairman of the house republican campaign committee who talked to the republican whips and told them they would be needing stronger bargaining position with president obama if they were to give taxpayers an early christmas present, vote to stepped the bush tax cuts all but the highest income earners and negotiate later about the highest -- about the very top bracket. that sounds like a way out of this corner the republicans have painted themselves into. >> it's an interesting tactic or strategy. the challenge is >> you're not against >> two things. by announcing -- we are trying to decide how to cut spending and we have a spending problem not a failure to raise taxes problem.

and i think we should be focused on spending and when you have chambliss, four or five congressmen have said, we could raise taxes here and there. to be fair to them, someone like south carolina lindsay graham said i would raise taxes a little if i could get a guarantee of entitlement reform, a series of things democrats will never give them. when the "new york times" or cbs reports that conversation or talk by lindsay graham, they said if he said i would be willing to raise taxes, the rest of the conversation disappears. so the challenge for cole -- obviously this was leaked, i don't think he intended to have a public conversation, but if you say things in front of 150 people -- >> he gave an interview. >> he meant to get it out that. then have a conversation about

trying to raise taxes and we are sitting -- a handful of republicans -- as you say over 90% of the republicans kept the pledge. all this talk about someone might break the pledge. people having impure thoughts. >> impure thoughts? >> under certain circumstances >> what do you mean by impure thoughts? this is a family event. [laughter] >> maybe thinking about raising taxes. >> is that what republicans do? >> no. a few of them talk about it on tv. the good news is most of them don't. the handful in the last week said we might raise taxes under certain circumstances and i have chatted with a bunch of these guys and they are clear, i said no, under these circumstances would i do that and point of fact, same five or six people >> let's be very specific and i covered you for a long time and you are a survivor.

you are -- you have a practical streak. you have never been advocate of suicidal legislative strategy, so i know that you are looking for a way that republicans can come out of this with their principles intact but politically viable. let's take >> doing reasonably well. >> understanding what you said about all things that are said around it, but if the choice is having all the taxes go up and have republicans be blamed and it's clear from polls that that would be the result and clear that from the reporting on politico and elsewhere, ben white had something this morning where he talked to financial

executives and talked to the white house and they have a state of the union and inaugural coming up and can use the bully pulpit. republicans know they will be blamed, if that is the choice or to cut taxes for almost everyone, you would be for taking that choice, right? >> first of all, i accept that if nothing changes that could be the scenario that plays out, but i'm not in favor of waiting for the train to hit you. one of the things >> that's what tom cole is advocating, rather than have republicans take this bath, go ahead and cut taxes for most people and then negotiate the rest. >> let me be clear. we can change the playing field so the republicans don't get blamed and the president is blamed if he is not insistent on not cutting spending and going over the fiscal cliff. he is out campaigning. last year he was campaigning and he is not being president. he is not negotiating that he said he was going to be, he is

campaigning and/or golfing. where is this story? themaking two cases to republicans and the democrats who listen. i believe we should have the negotiations on the fiscal cliff. that's two things. $500 billion tax increase, the 2001, 2003 tax cuts lapsing and sequestration of spending restraint. it is a good thing, but saving $100 billion, -- >> not a common republican point of view. a lot of defense cuts. >> the head of the conservative caucus, 60% of most conservative guys in the house, jim jordan said the only thing worst than the sequester would be not having the savings and you saw mitch mcconnell saying we aren't ending the sequester. people are drawing lines in the sand -- let's try to cut to it.

>> it has to be on c-span only then would the president have to say and boehner would say your spending cuts are what? cbs and nbc hasn't done that. and he was wandering around and if you look at the savings in this budget, $800 billion for not occupying iraq. and he cuts that as part of the savings. he counts of the savings, then you can't have the situation where republicans get why don't you raise taxes all day and no focus. once the bill is written, it needs to be online so everybody can go on their computer and read it and guys in the press can read it and talk radio can read it and citizens read it, not just congressmen or lobbyists and this is aren't obamacare and then surprise to the american people.

if you do those two things you won't get a bad bill rather than trying to negotiate with ourselves with cole is doing. he isn't negotiating with anybody when he is having that conversation, let's actually have transparency and the reason it is particular fun is that obama promised he would do obamacare in front of c-span and didn't and said he would. and nancy pelosi, boehner and the president that bills would be online for a readable time. needs to be seven days. >> we are on c-span. we're online. and i want to be clear about this. you're not against new revenue? >> i'm certainly for new revenue for economic growth and to give you two numbers to set the stage. this is important. grow at 4% rather than 2%. reagan percentages rather than

french or obama percentages, 4% rather than 2% for one decade that would net $5 trillion in additional revenue and pay down the debt obama ran up and pay down in a decade from stronger growth. you don't get stronger growth by raising taxes, but less growth. raising taxes doesn't give you the revenue but growth gives you the revenue. notin favor of real growth imaginary revenue. >> the flip side of the tom cole argument, if you don't agree to a small tax hike now, tax hike, there will be a much bigger tax hike to take place which would be everyone's taxes would go up when the bush tax cuts expire and then democrats would get credit, the president will get credit for the largest middle-class tax cut in history on january 2. how does that politically

benefit your team? >> how you work this out is how boehner and mitch mcconnell will competently do. boehner is the guy who has taken the pledge and kept it. he is the leader who kept every republican off the stimulus package. there were 30 or 40 republican appropriators who might have wanted to do shoplifting and part of that stimulus package and boehner was able to persuade them, don't touch it. it was a democrat-owned corrupt mess that didn't work. had 20 republicans, oh, can i get something for my district, then it would have been a bipartisan mess and 2010 would have never happened. boehner and mcconnell understand if the republican party is a part of obama's self-inflicted damage, if you hug him and do bad things that is unlikely to

work. >> is there a loophole in the pledge, if all the bush tax cuts expire and everybody's taxes go up and then republicans vote to eliminate taxes on everyone or to reinstate the bush tax cuts for everyone exeps the highest earning, they are voting for a tax cut, right? >> harry reid doesn't get it. the pledge isn't to me but the american people. if you are a congressmen or senator, you can say 20 different changes in the tax code in spending, look at this, this isn't a tax increase but a good piece of legislation, you

should be happy and people look back and say yeah. it's not only a test the day you pass it and obama explains what's in the bill, bush explained what was in the 1990 tax increase, only spending-cut bill and made it sound pretty good. but when the iraq war wound down, people said massive permanent tax increase and phony spending cuts. spending went up and not down and your tax increases hurt the economy. the economy is bad. so it's got to pass the lap test not just the moment it happens but between now and the next several sessions. >> so i hear in what you're saying considerable wiggle room. i hear you saying that republicans should not negotiate with themselves, should push for the best deal that they can get, but you aren't here as a dead ender, you're not saying that people should go off the cliff just because of a pledge?

>> first of all, we have this -- having the same conversation we had two years ago when we had the same fiscal cliff two years ago and obama decided he didn't want to damage the economy because he was up for re-election. same players, same chest board, and they extend everything two years because they decided the president wanted to save himself and not damage the economy. his position is i don't mind damaging the economy because the two democratic senators who are from -- >> i'm going to ask this a different way. you are a political analyst. you want republicans to survive and thrive. >> pro-taxpayer candidates to survive and thrive. i would like the democrats to take the pledge. >> what do you think the republicans should do? what is a way for them to make a deal with this president who isn't going to give on rates and politically smart and what you consider a fiscally prudent deal?

>> i want to stress, either the republicans sit with c-span cameras and say let's stepped the bush tax cuts for a year and let's have fundamental tax reform and here's what it would look like. >> what about extending 98% of the tax cuts if the alternative is raising taxes on 100% people? >> if it is on camera and the people watch -- if bush thought that was a vote winner, he wouldn't have put 86% of his tv ads. he ran a romney is a bad person campaign not look at how wonderful i have gotten the american economy. >> if it is on c-span >> you say here's what we want to do. we just elected a house which

ran on the ryan plan. >> you are saying these are the reforms that we want. >> the president sits there and says what, because he hasn't put anything on the table that passes the lap test, hasn't put spending restraint. crazy democratic leadership, which for two years kept all the democratic senators from voting on anything. i want them to vote on something between now and 2014 because then they aren't coming back. >> if you are john boehner, speaker boehner, your proposal is -- your bright line is what? >> first of all, you want to have this conversation in public and whatever happens, you want it online. that gives you the moral high ground and allows the american people to focus on this. >> wait, what you are saying

right there is a path to a deal, you're not saying they should go over a political cliff. you're saying they should fight for the best deal they can get, but you're not advocating cutting off your nose to spite your face? >> no. i had conversations with wolf blitzer. this is deja vu all over again with the end of the world, all dragons and going to go over the debt ceiling thing and the argument is do you want to default? no, we don't. we want to save $2.5 trillion in spending, and we won that fight. the democrats refer to the debt ceiling thing as a failure. no. no. we got the spending cuts that american taxpayers wanted and didn't get your taxes weren't increased. failure to raise taxes. the d's desperately need to raise taxes in order to fund a bigger government. >> my last question is, i have seen a three-tail test.

it should pass the lap test to constituents at home -- >> over time. >> that there is transparency, that it is on c-span and done in public, which you say would be a check of its own and finally that they pushed for the reforms and get some reforms. sounds to me like a deal that meets that test is something that you think that in the end republicans should embrace? >> we are getting into a slight hypothetical. i believe if you get those conditions you would extend all the tax cuts for two years and fundamental tax reform. there is pressure on obama to do corporate tax reform and he is willing to take corporate rates down but his plan is to increase the rates for the small businesses pay and in addition, as we are having this

conversation, there are five tax increases that aren't being discussed. five obamacare tax increases that start january 1. it is on our web site, atr.org hundreds of billions of dollars start kicking in on january 1 thanks to obamacare. i think the correlation of forces between the two sides is different than obama sees. he said i won re-election and i get to do everything i want to do. he ran his car into the bridge five months and took his approval rating down below 50 and gave himself a republican house in 2010 because he ran and spent that money because he thought the american people

signed off on it. and he ran out and overplayed his mandate. he is about to do the same thing again, not only with spending, but with taxes. and taxes are a stickier wicket than spending. the reaction by the small business community to his tax increases is going to make the tea party look tame. >> what happens january first if there is no deal? >> if they go over the two cliffs, you trigger the sequester, that's good, less spending. i'm in favor of looking at the pentagon spending and reforming how you get it and get the same amount of dollars. look at the government spending. >> not a common republican position. >> more common than you think, but it's not common in the appropriations committee that does armed services. i talked to one of the key guys over there and said how can i help you reform the pentagon? there must have been >> i bet congressmen love getting that call, grover norquist, how can i help? >> i start meetings that way.

want to make the government more efficient, make it cost less and we are everybody's friend on that subject. ralph nader and i were lobbying the bush administration back in 2001. >> what about the second cliff, the bush tax cuts? >> i think -- you get towards the end in a thing and if the republicans have played it right, they said look, push it out a month or two weeks so you should never actually go over these things, just as you do with continuing resolutions. say, look, give it a week, two months. >> the president is not going to extend. he knows that he loses his leverage that way. >> the republicans also have other leverage. continuing resolutions on spending and the debt ceiling increase. they can give him debt ceiling increases once a month.

have him on a short leash, here's your allowance. >> you are proposing that the debt ceiling be increased monthly? >> monthly if he's good. it's an accordion. that's what they did the first few months when the republicans took the house and the senate -- took the house, they said ok, two weeks of continuing resolution because you have saved $4 billion now you have agreed to $8 billion and have four weeks. what happened with the freshmen, the tea party guys said this is taking too long. let's ask for it all. you weren't getting everything you wanted. doing three yards in a cloud of dust and all the freshmen tea party guys are veterans. they would understand this time around why three yards in a cloud of dust for seven months is winning. >> do i hear you -- you don't think going over the cliff would

be that bad? >> i don't think we're going to go over the cliff. if the republicans do what they should do and can do, they will be in a much stronger position than obama. obama has no spending efforts and his tax increases hit many more people. we are going to start talking about the five taxes that obamacare hits, which includes kids with special needs, guys with flexible spending accounts, massive tax increase on them and the tax on medical devices. reduce the cost of health care by reducing the cost of medical devices by $20 billion. that reduces it, really? >> if the bush tax cuts expire and tax cuts go up, would you demand that there would be dollar-for-dollar spending cuts? >> the greater good test is how do you move the country to reduce spending over time and giving the government more money like giving someone who has a drinking problem a bottle of scotch doesn't help their program.

in 1982, they gave the government more money and promise todd save $3. they cheated reagan. i don't think any of us think we are tougher or more determined. and bush came by, smart guy, lots of smart guy and he got taken on two-to-one. >> if the answer is growth, how do you grow the economy from 2% to 4%? >> you actively take -- what obama has done and i think why he is significantly weaker than he think he is, all of the present debts, tax increases, regulation, health savings account isn't there for you in

the same way, you can't keep your insurance or your doctor, taxes, regulation and so on. that was all put after the regulation. the things they thought were popular, they passed right away. and you can wait until you are sick to buy health care and

other people will pay for it. those are the only two things they talked about. now all the unpleasant stuff, all the sharp edges come out. we have four years of unpleasant stuff on obamacare coming out. and all the regulations you sort of hear about now -- if they thought these regulations worked, made the economy better, they would have been bragging about them two years ago, one year ago. all these regulations need to be undone. >> we have a microphone right there. >> the gentleman with the beard. >> how does the fact that our budget has not been passed for 3.5 years affect this debate and would we have it at all if budgets had been passed as the law requires? >> the house has passed budgets and my argument that the house and the republicans are significantly stronger than the democrats runs from the following. the democratic senate was elected hiding from their budget realities, not voting on the budget, not allowing people to vote on things that obama said he wanted voting on in terms of spending and too much taxes. and the house has twice voted for the ryan plan and got re- elected. the house are not just freshmen from the tea party in from the field, guys who don't know what they are doing. they have won and got re- elected. 83 new guys came in two years ago. almost all of them stayed.

and the end, they now stay and got re-elected in nice districts that were redistricted by republican legislators to be helpful for the next 10 years and they get to run in those districts and just won with a headwind with obama winning at the same time they were winning. that's the toughest race they are going to have. first time in a new district, democratic president running over your head. next 10 years, you can't coast. and they have run touching the third will of american politics, entitlement reform, they have a plan on taxes and entitlements. >> let's talk about your image, a lot of people saw the headline "is grover finally over" and

this morning, preparing for this breakfast, someone described you as a 70's rock star who hadn't cut his hair, one of the japanese soldiers didn't know world war ii was over. >> is that a fashion? that person's an idiot. [laughter] >> i have job security that most people don't have. at least the marijuana legalization people could end up out of a job in a couple of years if they win, right. we are going to say our taxes are too high. we had a revolution when the folks were paying between 1% and 2% of g.d.p. while the brits were paying 20%. we were saying ridiculous, we are out of here and started shooting. the government is taking a third of our stuff, the idea that people want higher taxes or will put up with higher taxes doesn't show up in the way guys are at the state and local levels.

people who cut taxes are succeeding. i understand this effort by reed, who doesn't want to say, i want to raise taxes so i can spend more of your money. and i wish that they had helped me raise taxes. he says grover tells them to do. and that's silly. they know perfectly well that the reason they made a commitment not to raise taxes is they don't intend to raise taxes. the pledge made it easy to communicate. they don't need my permission and don't want to raise taxes. >> you are partly a creature of the media and there has been a radical change in how you are portrayed. john cassidy in "the new yorker". how grover norquist keeps the conservative movement together. same writer, "new yorker" this

week, six years later portrayed you in a diaper and says "will the g.o.p. push grover off the cliff"? >> again, we were on the fiscal cliff then. and attack me personally. >> there has been -- not so much a math argument but an argument that there has been a change in the way these issues are regarded, even by a lot of top republicans. >> they are the same six people they brought out two years ago. saying the same thing. and again, and they didn't raise taxes before. they just thought about it. which is why you got into the impure thought. i don't want to be too rough on

him. he talked about may be someday doing the tax increases. again, we have 92-plus guys in the house and senate who have taken the commitment. we have governors and state legislators who have taken the pledge. the reason why it's easier for me, i mean, you could have said, you could have written a story in 1990 when bush broke the pledge, first president to ever sign the pledge, reagan helped me design it but he was not running for re-election. >> you think you have job security. >> the tax issue is there and is an important part of the modern republican party. if the departments ever switch teams, we can fight about trees or something else. and that's my goal. so everybody agrees taxes should be out and we should find something else to argue about. this has been extremely helpful. when bush raised taxes did that break the pledge or two years

later did you have ivory soap percentages of all the guys running for office taking the pledge because they knew that the american people demanded seriousness on the part of an elected official, that they wouldn't raise taxes, not thinking this was some transactional promise you could break like a pie crust. so, you can lose a fight and end up with the issues significantly stronger. that's what happened with obamacare. the democrats lost the house. >> that's what you think may happen here? >> yeah. well, i'm not planning on losing the tax debate we're having right now. but the tax issue will be more powerful in 2014 and 2016 than today. >> even if republicans lose you believe the issue will be more powerful? >> it is possible if the republicans lose in such a way that they've got their fingerprints on the murder weapon, then you have a problem. bush couldn't run again in 1992 successfully because he had his fingerprints on a very bad deal which was bad on spending and bad on taxes and he broke his word.

you do that, you have a problem. as long as the republicans have clarity between their approach and the -- and credible clarity, not just in their own mind clarity, what we secretly mean to do even if we seem to be having tea with guys who are doing bad things. you have the public, again, the people you're trying to impress -- >> wait, republicans -- >> the middle guys. >> so if republicans have clarity, you think they're going to be ok? >> yeah. >> so i hear you saying, like, you're not going to have a superlegalistic, superliteral interpretation of your pledge. you're going to consider the circumstances? >> ok, since the american people in each congressional district and each senate are the people to whom these congressmen have made the commitment, they're the ones who will say, hey, what are you talking about? i didn't have to send anybody a press release in 1990 that said, did you notice bush raised taxes? ok, they noticed. so if a deal is back, if it isn't the spending you thought, if the taxes are not diminus or evening out or something, and people look at it and go, that's a massive tax increase

and no spending cuts, that would be very bad. and nobody can call me on the phone and say, grover, could you fix this? because despite the fantasy, i'm not the guy who handles this, the american people make these decisions. my advantage is i'm for lower taxes and so are they. and all of the lovely polling that you see keeps confirming that. but you always have to watch two things. on the day they did the exit poll, one poll, should we raise taxes to reduce the deficit? 62% no. now they cobble together some other polls and come up with 60% of people would be for some taxes in some circumstances. the question before us now, should we raise taxes to pay -- to reduce the deficit? 63% no on election day. on the question of if they raise taxes on the rich, do you think they'll go after you at the same time, in any budget deal, 75% of the american people understand that what the democrats do is play trickledown taxation. they talk about taxing the rich

and then they screw everybody. >> speaking of election day. we were talking backstage, you said the republican party should do an autopsy on what happened on november 6. what do you mean? >> well, because you don't want -- you have those "c.s.i." shows on tv where they open up the cadavers and take all the organs out and look at them all. you don't want to look and say, i see one wound here, that must be it, and run off and say that you've solved the problem. >> it's not just the hispanic voter. >>. no and i think the republican party, as a free market economist, i believe the republican party should stay with its reagan-bush-bush roots. and we've nominated the most pro-immigrant candidate running for president since reagan. the party that's supposed to be against immigration nominated john mccain. so it's not only been where the

party actually has been electing people, it's where its policies are. if you want free market economics you want talent and youth coming to this country. if you're a national security conservative, why is the united states going to run the world or be very important and powerful in the world in 100 years and japan isn't? because one, they forget to have kids and they don't do immigration. china, same thing. and europe the same thing. immigration is our competitive advantage against the rest of the world as an economic power, a military power. >> so what other wounds would you look at? >> that's one piece. i think we need to look at -- and our candidates. we ran a candidate, romney, who was a great guy much he's not what the 86% of obama's ads said about him. but how do you make the case of how romney would govern when he was governor of massachusetts for four years, pre-tea party. >> let's stipulate romney was a bad candidate. how would you get a better one? >> there are 30 republican governors. 24 of them have republican legislatures which is what

romney didn't have. he had 83% democratic legislature. he was a goalie. they just shot goals on him for four years and some of them went through and some of them didn't and he was a very good goalie but you can't turn around and announce, look at all the things i did in massachusetts and the democrats attacked him saying the massachusetts economy was bad. yeah, it was. high taxes and all these other things that he couldn't fix without legislature. i'm from massachusetts prior to emigrating to the united states. and -- [laughter] it's tough, it's tough to be governor there and show people what you've accomplished. now, if he'd been governor of one of those 24 states with a republican legislature, i mean, the governor of texas has been doing amazing things on tort reform, they're looking at school choice, half the kids in louisiana -- >> so you think rick perry's your candidate for 2016? >> he's got to get over the back pain stuff. rick perry has a tremendous track record of success, probably running again. could run for president. he's one of >> how do you

>> 10 of these 30 are or will be megastars and i want to see sort of a -- >> so you'd think he'd be strong if he ran again? >> yeah. >> you've talked about how -- >> but you got bobby jindal in louisiana, you've got a lot of great governors, virginia, ohio, indiana, wisconsin, scott walker changed the world. >> you were talking about how -- you've talked before about how 1972 -- you were 12 or 13, you worked for president nixon. you had index cards. what you do you think the republican party should learn from what the obama campaign did with technology on november 6? >> i wrote index cards of the addresses of the campaign contributors. this guy sent in $5. we were not high-tech. you're talking about having guests, you should have one of the key republicans from the campaign come in and begin the autopsy thing. i was talking with ryan to use the autopsy analogy. you have to take all the organs out and one of them is the get out the vote effort.

people are focused on that. it may well be, this is it, that's what was the big deal. maybe it's one of 10 things. >> what else is on your list? >> i think we need somebody who has a track record and -- >> talk about the mechanics of the campaign. what else? >> you got to decide to focus on the issues and you have to have your candidates practice, practice, practice. we need to decide -- we have a campaign this last time with 10 people up on stage. several of them were trying to sell books. several of them wanted to be radio talk show hosts. some of them were doing marriage counseling. there were maybe three of them actually running for president. and i would like to figure out a way to have everybody up on the stage in those debates who's actually running for president. allen keensy. he's not running for president. yet he would be on the stage. >> how do you narrow that?

i can tell you republicans are worried, jim and i did a story the other day, about how there's at least 20 possible republican candidates, at least a dozens of them are serious. aey're worried about too big field. what is your solution to that? >> well, they now can change the rules for the republican convention between conventions. so the r.n.c. changed the rules in this convention to allow them to change the rules. so they could tighten up eligibility. i don't think there's anything wrong with asking people to ante up. raise $100,000 for the party that will go into the general election, if you want to be in the debate. be a team player. show us that you've accomplished something. i would hope the first three debates would be, one, the first one in front of republican governors. with them asking the questions. i mean, one of the challenges, you have some left to center media guy asking the republicans questions about sex and then these are guys at home going, the republicans are obsessed

with sex. no! anderson cooper kept asking these questions and they had to answer them. get a republican who's interested in republican issues on how to govern asking the questions. other governors, then do it with members of the house. then do it with members of the r.n.c. invite c-span in and anybody else who wants to cover it. but control the dialogue so that the questions that republicans want to hear -- >> [inaudible] what did he stay in >> he said that's a brilliant idea, grover. [laughter] he said something along those lines. he thought it was a good idea. i don't think it happens tomorrow. >> so, debates controlled by the republican party -- >> so start with. >> and raising $100,000 for the party. >> to get you in the debate. or, it's not riffraff, i mean, you could argue, well, ron paul wasn't really running for president, he was running to build the libertarian movement within the republican party. but could he have brought

resources to the table as part of the -- >> bible camp. we're about to get the hook here. last question and last topic. and go ahead. >> [inaudible] national school board association. first op ed -- i'd like to hear thoughts on how we can sustain vital investments in things like education without taxes. >> invest more in topics like education without more revenue. >> well, i think you take a look at the history of spending on public education in d.c. and any major city and say, as we've spent more dollars per capita, have we gotten more education. >> your short answer is you don't. >> no. and this is where the modern republican party is light years ahead of the 1994 gingrich revolution where guys said, get rid of the department of education, get rid of the

department of energy or whatever. no, reform government so it costs less. 100,000 kids in arizona will now have a $5,000 voucher, they can take to a public school, a private school, a parochial school, home school, if they don't spend it -- >> so you're saying -- >> you don't need more money, you need reforms. would allowing fedex and u.p.s. to deliver mail make your post office mail get their sooner? >> this is one of the questions on the card. when you leave here very shortly you're going to go to your wednesday meeting. this is a literal meeting of the right wing conspiracy, right? >> about this size. >> this is a weekly meeting that you've had -- >> some of the people from there are here. [laughter] i see you. >> so this is a weekly meeting of what you call the center right coalition. you have similar meetings, 60 of them, in 48 states, around the country. and this is a place where

members of congress, people from think tanks, people who generally agree get together to kind of open mike, there's 150 people, sometimes 20 of them will speak. what are you -- >> what's your message for them? >> one thing, the reason people come to my meeting is i don't tell them things. thank you for coming, let me talk. if i talk it's 1/30 of the time. we have 30 people present. they put themselves on the agenda. and we'll over time have candidates come through and so on. but it's think tanks, it's activist groups, it's guys from the hill, scalise, who was just elected to run the republican study committee, the conservative caucus, comes to talk about what he's going to do. very brief presentations because what you want is everybody in the movement to understand what everybody else is doing. now, we'll have special guests. al gore came and presented before his movie came out. he came and showed part of the movie and stayed for an hour and talked about why he thought we should be for shutting down the economy because of global

warming and who was our friend, not warren buffett but the other guy. soros came by and had a great conversation. ralph nader has been by. >> jack abramoff. >> yeah, years ago. >> what did you learn from his fall from grace? >> he did me a favor of not actually involving me in his problems which was good. but i think he spent too much time trying to make money and not enough time trying to change the world. >> are you still friends with him? >> i haven't talked to him in a long time but i have never said anything snotty about him, i don't disease like him. >> as we go, you have an unusual hobby. tell us about that. you collect something unusual. >> oh, i have a collection of whackers, things you hit people with, mostly from africa. i also have a collection of air sickness bags from most of the world. if anybody here travels. and the one thing i do ask

people who come to meetings, if you're traveling and you're on one of these really -- i have an air sickness bag which is the pre-present government afghanistan air sickness bag. it's a great collection and somebody mentioned this years ago in a profile, i started getting emails. how many of the turkish airline ones do you have? do you want to trade? i thought this was an odd, quirky thing i did. it's bigger than you thought. >> you're off to the meeting. whales the mood at the meeting? is the center right coalition besieged? >> no. actually people are very optimistic and -- look, people were disappointed because we didn't have the house, senate, presidency. gos like your stock didn't up. but -- >> your stock went down. >> are you kidding? we re-elected a house, stronger than the last one, the president got elected for four years. we lost -- look, two seats in

the senate. you either have 60 or 50 or more than 40. we have more than 40, enough to filibuster anything you want to filibuster, not enough to pass something. which is exactly where we were before. the disappointment was we didn't take the senate, we think we should have. you look two years ahead. there's every reason to see that you'll take the senate. and you look at dish mean, half of what we do focus is on the states and as you mentioned, we have 48 states with meetings like the d.c. meeting where all the same people -- we have 90 people get together in austin -- >> there will be what? >> work. work. there's no time for whining. whining is not work. and we didn't have people get -- you know, when we won the house in 2010 people didn't come in and get all giddy the next day. they said, ok, what do we do now? >> wine something not working. ok. you're not going to top that. >> gloating is not work either. >> thank you twitter, c-span, the others who are here. we appreciate the hardworking

politicos who made this event possible. thank you all for coming out so early. really appreciate it. a huge treat next. playbook breakfast, next wednesday, a week from today. we have bob woodward and marco rubio. thank you for a great conversation. >> thank you. >> thank you. [captions copyright national cable satellite corp. 2012] [captioning performed by national captioning institute] >> the lessons of the 1990 federal budget deal. john boehner, house democrats, and president obama talk about the fiscal cliff. several live events to tell you about tomorrow morning. a report on british media practices that included among

other things, phone hacking of people of in the new spirit that is on c-span 2. on c-span 3, the senate environment and public works committee will hear about the impact of hurricane sandy. coming up, former congressional leaders talk about what congress learn from the 1990 agreement. from the bipartisan policy center, this is under two hours. >> ok. welcome. i am the director of public administration program. i want to welcome you to the

session, which we are calling looking back to move a forward. this is co-sponsored by george mason university and the bipartisan policy center. it is our pleasure to put this on and to recognize with all the frenzy about the fiscal cliff that we have a history. some of the history is successful in resolving deep seated hard choices. that is will we will look back and talk about today and see whether we can learn any lessons from the experience. we will go over the detailed program in a few minutes. i want to introduce our keynote speaker tom davis. he has covered many basis. he was the county executive of fairfax county. he was the representative to congress and became a chair and it did many important hearings and remains very active as a

speaker and a policy observer. he is also on our faculty where he teaches a course on southern politics that fills up five a minute after students get to register. a very popular lecture. tom will kick it off and i will come back and talk about the detailed program and we will give started. >> thank you very much. i left congress undefeated and unindicted. i just want to welcome you on behalf of george mason university, the bipartisan policy center. mark twain once said history does not repeat itself, but it's sometimes rhymes. i think that summarizes what we are trying to do. with a fiscal cliff approaching

and leaders working to explore an agreement that would avoid an economic free fall while securing progress in securing the long-term debt, we will go back in time to better understand the better prospects. we will look at the last time both parties joined together in a bipartisan summit. the 1997 brought all key players, members and staff in what resulted in a successful five-year agreement. congressional democrats and george bush agreed on a package saving over $500 billion over five years. they locked in discipline for the future by achieving major process reforms including an adoption of discretionary spending caps on the mandatory revenue sides of the budget. there were doubts about whether it could be done. skepticism always flourishes when the stakes are high and leaders are presented with hard

choices. congress rejected the first proposal, but they persevered to complete the project. we will be hearing from two panels. the first will consist of many of the principles of the first agreement. the second will reflect on lessons we might take away from the historical agreement for today poses challenges. we suffered no illusions here. the past is unnecessarily prolong. there are many differences between the environment in the budget of 1990 and today. today's parties are more polarized than they have been in decades and there are macro trends that make the divide even deeper. the difference is, the parties today are will recall ideologically sorted. according to the national journal, the most liberal is

more conservative than the most conservative democrat. by the way, olympia snowe, the gap even gets wider. some of the more liberal republicans are leaving the house. that device gets even deeper. the parties are ideologically sorted. complimenting that, reinforcing that division are three other major factors that did not exist in the 1980's. the way congressional districts are drawn with computer models today, most districts are pre drawn to elect one party or the other. that means most of us in the house or about primary elections, we do not worry about the in general elections.

my experience has been primary voters punished compromise. there is a slew of former members that had higher aspirations that can testify to that. when you take a look at the redistricting this lost time, even two years ago and then to a 2010 when you had the highest turnover since 1938, less than one-quarter of seats were in general contention. reinforcing those are what i call macro trends. the fact that the media models are far different than they were 20 years ago or even 10 years ago. you did not have a fox or msnbc. people now tune in to what they want to hear and get their views reinforced.

talk radio was beginning to flourish, and you did not have the internet. the crpa to content ratio is very high. only 50% get their information off of the internet. they get things passed along. these are not what i would call a first to bring us together. they tend to be polarizing mechanisms that make it more difficult to achieve compromise. if the speaker were to cut a deal today, by the time he was back on capitol hill, if shawn kennedy or ritual maddow did not like it, switchboards light there is one other fact that is not talked about as much but it's equally important. that is the fact that campaign financing has changed.

we have passed landmark campaign finance reform. i did not vote for it, i am happy to say. the difficulty with that is its tries to take money out of politics. it limited money to parties who limited how they could make money. that money did not disappear from the political process. it moved and now it is out in super pacs. you have more money now coming from third-party groups then you do from political parties and candidates combined. what does that mean in the mind of a policy maker sitting down and looking at a deal? member after member look at me and say, i am scared to death of one of the super pacs. leaders lose their leverage in terms of how they can help members. these others on the outside in the right and the left are in power. these are factors that did not exist that makes the solution

today more complicated. i think many have lost confidence in the ability of our politics to solve the problems we face. it is healthy for all of us to remember we have faced these choices before. we serve with people who were there who were good, able people. we have friends that are working to make it more difficult will arrive at a decision the good news for americans is that these problems are solvable. they are politically difficult, politically hard, but they are solvable. we are very hopeful in the coming months that something can be resolved in a number of these areas. i hope you enjoy this forum today. we have got a great panel here to lead us off. witnesses and participants to the first agreement back in 1990. i hope you enjoy it.

>> thank you. just a few words before we get started with our first panel. this meeting today is the first project of a commitment we made to do an oral history, or a multimedia history of the federal budget process. as important as these decisions are, it has not been done and not captured. as you will see today, there is a rich history and the memories of people we have assembled here. it has contributed to keeping the fiscal policy going in some reasonable way. we want to capture both those staff-level kinds of experiences, as well as the

experiences in budgeting where leaders get together and try to make hard choices. this is the first of a number of sessions like this we hope to conduct. tom has told us these are not easy politics. it is probably just as difficult in 1990 and may be more difficult today. all of us have our own way to solve the fiscal cliff. we could do it in the shower. the problem is there are only 536 people in town who have to do it in a way that is palatable to the nation's public. that is not easy. we thought it would be useful to review the significant budget compromise that was achieved in 1990. not that there was not one in 1997, but this was the most significant one that caught the mold for future budget agreements, not only in terms of items on the table, but the

budget process elements that were agreed to, the walk in restraint. we really want to understand how compromise was made, where work the key -- where were the key players. how do you make hard choices with the glare of 247 media coverage and polarization, and how do you do it in a way that guarantees some political success? that is the real challenge we want to understand today. we were fortunate to have teamed with the bipartisan policy center and bill, our partner here. he will moderate the first session. we have brought together, we are still waiting for the former speaker, and number of order -- former leaders who were there at the summit. at the air force base as well

as forums around washington, to craft this deal. it was not an easy deal. as we will hear, it is powerless to succeed. it lost a couple key votes in the house. ultimately, it was agreed to. we will hear about the issues, how to be resolved in the first panel. the second panel will be looking more at lessons learned. for today. we will assemble a panel of media observers and other thought leaders in washington and elsewhere. we should be done by noon. with that, i guess we are waiting for the speaker. i do not know if we want to go ahead. >> is fine to go ahead. he will be here shortly. >> ok. >> good morning. it is a real pleasure for me to

moderate this panel of very distinguished americans and public servants. thank you, congressman, for your presentation. i had the honor of serving as a senate staffer here for nearly 27 years. almost all of that time was spent here in this committee room. working for the chairman. i never sat up here. i can tell you that. during that time, we did many budgets. bills were debated, discussed, and some were adopted. one of those pieces of legislation, 22 years ago, was the budget reconciliation act of

1990. that implemented the budget agreement negotiated over many months. we are fortunate to have with us on this first panel, some of the key participants in that debate. unfortunately, two key individuals, senator robert, at that time, a director, and dick, are no longer with us. theannot understate critical role both played in this debate, whether one agreed or disagreed with them. the further back one looks, the further ahead one can see. we will look back on budget deliberations with an eye on looking forward. are there any lessons to be learned from that time that might apply?

let me set the stage a little bit for the audience and some of us to refresh our memories. as one grows older, the memory gets more fuzzy. the congress was controlled by the democratic party. in the house, there were 250 democrats and 183 republicans. a margin of 67 votes. today, in the new 113th congress, that is flat, with the majority controlled by republicans, with a split of 49 votes. in the senate in the 101 congress in 1990, there were 55 democrats and 45 republicans. that might sound familiar. that will be the make up of the next congress. the republicans sat in the white house in 1990. those who recall this debate

like to focus on the 11 days in september 1990 when 26 congressional and administration officials were sequestered away at the air force base to find an agreement that would replace the sequester confronting the country that fall. those of us who support staff peace negotiators, will recall this was pretty much presell phone -- before cell phones. the food was good. at the time, one participant said, maybe the time would have ended a lot sooner if the food was not so good. it was not going to end before the prime rib night rolled out. on monday night, we had our prime rib and we left andrews. anderson, who will speak for the

departed, developed t-shirts that reflected our participate -- dissipation. the journey was much longer than those 11 days. it began in may of that year. it's stretched from the conference room at the white house to the converted officers bar at andrews air force base, and finally to a conclusion in the private dining room in october. the speaker will be here shortly. he will present his views on this. along the way, there were fears in the economic disaster. they were raised, if the

scheduled sequester was triggered at that time, and that sequester at that time, as estimated in october, 1990, was there would be a 31% reduction in defense spending and a 35% reduction in non-defense. triple the size of the sequester that faces the country here in january. at the same time, the deficit for fiscal year 1991 increase in the budget in february when it was submitted -- >> 31%? >> yes. where did it come from. -- >> where did it come from? >> it grew out of the 1985

legislation we adopted? . the deficit estimate had increased to nearly $300 billion by the end of 1990. all of this was in the mists of saddam hussein invading kuwait on aug. the second. -- august 2. these gentlemen were there. it came down to something extremely familiar to everyone in this room. that is taxes and spending. more specifically, the desire of the president's was to have a capital gains tax cut. democrats would only agree if the overall rates were increased. no such agreement could be reached. democrats retreated on the rate increases while setting for a

limitation of tax deductions for high-income filers. sound familiar. each of these distinguished panelists will give their regular -- recollection of the budget. its prose at its cons, at its pitfalls, and most importantly, what lessons from that experience can be applied today. i am sure they will want to interact with each other. we will open it up after each one makes opening comments they want to make. then, if time permits, we will certainly open it up to you and the audience to ask any specific questions you might have. in the absence of a speaker at this moment, i would like to proceed with the honorable governor, a former chief of staff, at this time. cover sununu -- governor sununu, welcome.

>> thank you. i have never sat at this table. thank you. >> i sat here a lot. >> i think this is a very interesting coincidence in history and time to have us here discussing the 1990 budget agreement in the context of what is happening today. i want to, right from the beginning, acknowledged what i believe was the very instrumental leadership roles of folks like speaker foley and george mitchell, bob michaels, and bob dole. there is no question none of this could have happened without them coming to the table and understanding how important it was to achieve a result. i also have to emphasize what i

believe is the fundamental catalyst for all of this. that is there was a president who was determined to solve this issue. absolutely determined. as we see, not only was he willing, but he ended up sacrificing tremendous political capital, personal political capital in order to do what he felt the country needed at that time. there are a lot of folks who like these kinds of agreements to take place in a climate where there are no politics. it will never happen. it will never happen because politics is the cement that holds the system together, not what divides it. in my opinion, there are three political aspects that have to be looked at in what happened in 1990 and certainly have parallels to what is going on today.

there are the politics of the differences in philosophy. there certainly is a liberal perspective, generally attributed to the democratic party, a conservative perspective contributed to the conservative party -- republican party. there is nothing wrong with having differences and commitments to different philosophies. the second slice of that is the detailed differences with and that separation of two principal philosophies. to a great extent, the negotiating of and a budget agreement, you have to understand the internal are the differences, the details that are absolutely important. in creating and crafting a majority that can allow something to take place. there is nothing wrong with those. finally, there are a third set

of politics. that is the politics of personal agendas. i will not credit that third one with the same point i made on the other two. sometimes, there is a great deal wrong with that aspect of politics. all three of those are in place today. all three of those were at play in 1990. to a great extent, the president's the big man was certainly triggered by the sequestration obligation that followed. just so, i think it is an important historical note for me to emphasize that there was a meeting in the white house in the spring of 1990. nick brady, secretary of treasury, invited a number of the central bankers who were in washington for some of the international banking meetings,

to come to the white house for a reception. i think at that reception, the president heard the serious concerns of the financial community around the world that this country needed to have a but it that followed on what they had done, and what provided the framework for stabilizing the financial situation in the u.s. i believe the president after that spring meeting really resolved to provide the leadership to make this happen. bill has talked about the time line. it started with a meeting in may where the president invited the congressional leaders down to the white house on may 10. we started with an initial negotiation on may 14. the process really took a little bit less than six months from

the time it was triggered in the white house to the time the legislation was signed. that may sound like a long time. considering how long we have been struggling over our recent battles, it seems with a little bit of hindsight to be fairly efficient in terms of that process. i would like to talk a little bit in more detail about the fact that they're really two agreements. the fact that there were two agreements, the reasons for them, the way they were achieved, and the implications of the two agreements, really have a great deal of information and a great deal of lessons to understand how to do and perhaps how not to do what we need, to accomplish in the current climate. an initial agreement, which met

the criteria of what the president wanted done, but more importantly, in the process of working with the republican members of congress, the president had directed to make sure we understood what republicans in the house and senate felt were required for them to support the agreement. in particular, the most fundamental issue was that there be no increase in tax rates. a familiar point if you read the headlines today. the republicans in the house and senate said they did not want to increase the tax rate. secondly, there had to be two or three, at that time we were talking three or four to one.

in terms of cuts to spending to the revenue raised by whatever we did on the tax and fees side. in that process, we set up a procedure on the senate side with the senator, and phil was in close communications with bob dole and other members of the republican side that cared about the budget. on the house side, bob asked us to deal with newt gingrich. so i had an informal arrangement with both that we would run the process through them. they would participate in the negotiations. when we got to a point we felt the president was willing to compromise on issues, we would run that process through.

the first agreement was achieved. it has been noted it had no increase in tax rates. no increase. the additional revenue, generated by mostly consumption taxes on gasoline, luxury taxes, there were additional revenues specifically fenced off, which were produced by increasing the payroll tax. there were additional revenues fenced off for medicare by extending the cap on medicare. at that time, it had a gap. all of the other taxes in there were primarily related to use or consumption. it met the criteria established by the republicans in the senate and the republicans in the

house. we presented that to the committee as a whole. to the participating members of the republicans but dissipating in the process on the house and senate side as a whole. i had a specific conversation with both gramm individually and gingrich individually. it was agreed we had met the criteria. i am not positive of the numbers. i believed it was something like 375 or $380 million in cuts. $125 million in revenue in the first package. roughly three-one. the white house was under the assumption this was acceptable, everybody we had contacted who was part of the process agreed to it. we sat down with the democrats,

confirmed to them that we had a deal. tom and george mitchell went back to their much larger gaggle. they had the majorities in the house and senate. finally, the leadership in congress, the democratic leadership, the republican minority leadership in congress, and the president, agreed we had a deal. that went to a vote. that was going to go to a vote. in between that process, we began to hear rumbling. some of the more conservative members of the house led by speaker gingrich were uncomfortable with the fact we could never identify what, specifically they did not like. the, always came back, it had taxes. everybody knew from the very beginning after the initial process started that there would

be a balance between revenue and spending of roughly three-one. everyone was invited to the rose garden. history has well documented the fact that newt gingrich came to the meeting. everyone thought he would join in the rose garden. he did not. the president announces the agreement. it goes to a vote. early october. it is defeated by a coalition. conservative republicans and ago -- liberal democrats. the president is committed to have a package. we sit down again. this time, recognizing we probably have to negotiate a package that is more favorably inclined to the democrats. there is no way we could get less taxes than we got in the

first package. we negotiate a new agreement, which, in my opinion, was far less good than the first package. the new agreement did cut tax rates. it shifted about $30 billion of the five-year savings. $30 billion from the spending side to the revenue side. that are the fault -- those are the final numbers, $350 billion and 140 to 150 billion in revenues. we did have to yield on tax rates. in exchange, we did get a cap on capital gains at 28%. let me talk a little bit about the tax rates side. i think even the change in tax rates has not been well

understood historic the. the rates at that time or low income rates of 50%. in the middle range, 28%. that extended out to what we now call the wealthy. on top of all of that, there was a bubble in the middle. everyone forgets about the bubble in the middle, which was a middle-class tax rate. it was 33%. millions upon millions of americans were significantly affected by that bubble rate. when we negotiated a change in the 28% for the wealthy, and raised it to 31, we were able to reduce the 33% for the middle class down to 31. we now have a system of 15, 28,

and 31. i stress that. now, with everyone arguing about the fact that the rates are critical issues to look at, that budget agreement so aligned actually cut those rates on the middle class from 33% to 31%. i believe there is one point that came out of the budget agreement of 1990 that is not talked about enough beyond the points i have raised. that is the critical nature of the budget enforcement act, which was part of that. as part of the agreement, as part of being willing to talk about revenue at all, the president insisted and we were able to negotiate an agreement that provided a new piece of legislation under which congress would budget spending and

revenues in the future. that was the budget enforcement act. it built into it very specific and delivered pay as you -- and deliberate pay as you goa rules. with all due respect to my friend, president clinton, and newt gingrich, who have been running around in recent years, patting themselves on the back, i truly believe the surpluses of the 1990's were generated by the agreement that came out of what tom foley and george mitchell and bob dole and george herbert walker bush did with the budget enforcement act, which required those budgets to make sure they did not spend more than they took in. i think the surpluses of the 90

or the best legacy of the budget agreement. i will stop there. >> thank you. turn to my old boss, the former chairman of this particular committee. a little factoid, he will remain in history as the longest- serving chairman of this committee because of term limitations placed after his departure. senator. >> thank you. thank you for your interesting remarks. it is interesting to see how things are similar and how things are so different. i want to say to all of you, my voice is not as good as it used to be.

they tell me i still have hopes of it coming back. is not as good as i used to be. -- it used to be. i will not contribute as much. i do want to say i think this is an exciting thing to do i hope you finish it. i hope you put down what happened now, what happened then, what happened now, and what the budget players in congress actually did. i regret to tell you i have one additional reason for you to put it down this time. contrary to last time, i truly believe there is a chance that

we will not only fall off the cliff, but we will break the bank and the monetary policy of the world will go upside down and the very strong position of the american dollar will be put in jeopardy. i do not believe the players get it. i think they are so besieged by information that they do not think there is a chance this enormous deficit and debt, no matter how you figure it, it is enormous. i think there is a real chance something very bad will happen.

i want to thank the governor and the speaker if he arrives. my first reaction in the 1990 budget is that it was a failure largely because it was a goal of turning a $200 billion deficit in to a projected surplus in 1994 was not achieved. by 1994, the deficit was over $200 billion. when i supported the final budget reconciliation act the president signed into law november 5, 1990, to implement the agreement, it is true the fundamental issues we confront on taxes and entitlements spending were really not addressed. an agreement was reached

largely out of exhaustion and convenience. to bring the debate to a close, that was the reason. the surprise remains even today. the matches of the federal expenditures and revenues were not solve the then -- solved then. they have been on a course to return and dominate our current debate. the 500 billion deficit reduction we agree to back then, two thirds of what is on the spending side, one third was from increase in revenues. the savings in spending, $200 billion, came from putting caps on discretionary spending, primarily defense spending. a small percentage came from addressing entitlements. less than 10%. i want to make sure this

senator a enologist it was no little feat to get caps. consider to be just another procedure, they did turn out for a while, serving as a formidable obstacle to overspending. looking back, had we been bolder on fundamental changes on medicare and medicaid and social security, we might not be experiencing problems we face today. as a republican, i was disappointed that the 1990 agreement may have been a contributor or factor in president h. w. bush being a one-term president. my second reaction is the 1990

budget summit agreement did demonstrate that even in a divided government, congressional leaders on both parties and the president could come together with an agreement to avoid the then-pending 33% sequester in an act -- and enact legislation that would reduce the growth of spending and raise taxes that in today's dollars would be equivalent to $1.80 trillion over a 10-year. -- 10-year oerui, period. be the correct development and concept of element the chairman put forward, it was -- i was

also disappointed at the 1990 disagreement. may have been a factor in in beating my good friend. those changes did not help to limit the deficit and deficit spending and helped to lead to the 1993 and 1997 budget agreements, leading to the balanced budget act of the century. and and that is also true, after months of negotiations and sequester aning for what was toe a weekend retreat, had put to rest, two of the big eight you will hear from today. i guess they will be dubbed the gang of eight.

along with speaker foley, brady, dick durbin, the house majority leader, the house minority leader, putting the final agreement together a day before the massive sequester was to hit. as i look back in history, the end of the sequestered came down to something familiar today, a tax issue. a tax rate issue. president bush wanted to lower capital gains tax. democrats in congress would go along only if there were higher rates. the house minority leader said no, the price was too high. democrats retreated on a higher tax rate, settling on a limitation of tax reduction for the wealthy. does it sound familiar? it sounds more than from other.

the final reconciliation bill was on popular on the left and right. the final votes reflected the difficulty of reaching agreement. it passed only because there was a majority of both democrats and republican caucuses willing to cast a vote. the big lesson for any deficit reduction agreement takes leadership, compromise, and a willingness to list one spot possible political future for the good of the country. if there is no willingness to do that, there is no willingness to save the country. that has not changed in over a quarter of a century. the more i read, that i think i am prepared to say it has not changed. since the founding of the

republic. thank you. a quick, to those putting this together. i think it is the right time. do not let it get away from you. get it put together as a historical document now or you will never get it. there is a chance the nation will have a tumultuous financial future and you will not get the record you want this episode. and you. >> thank you. >> i would like to turn to the representative. i thought honestly and i apologize you voted against the final reconciliation bill. you did not. you voted for it. i was trying to get balance. i know you have had concerns, particularly as it relates to the chairman of the house appropriations committee and that time to some of the process items.

i welcome you and thank you for participating this morning. >> thank you. i appreciate your asking. we were asked describing this conference what led to the agreement. why was the initial agreement defeated? what lessons does that experience hold for today? let me start by saying i agree with the comment made by the governor. about president bush. i think he will go down in history as a significantly underrated president. he did a number of crucial things. the way he dealt with the invasion of kuwait, he involve everybody can reach. >> it is my understanding we

made money on that war. >> you are not supposed with knowledge that. [laughter] -- to acknowledge that. [laughter] >> the president showed a good deal of courage. the budget deal. that agreement put us on the road to a reduced deficit. i do not think you can understand the deal unless you understand the context in which the deal was made. we have to remember that deal came after we had a lot of experience with the inflated economic assumptions which had been used to pass the reagan budget in 1981. after three failed attempts to fix the deficit, we ended up

with something failed to work. that shows the necessity to have realistic expectations about what your policy will do. you probably cannot see in the back of the room my old chart. what it shows is the deficit expectations under the, between 1985 and '90. the green line shows what actually resulted. what it shows is that we started out with a deficit of $172 billion. it was supposed to go to zero by

1990. if you are taking a look at the broader context in which this debate took place, this chart shows what has happened to family income during the previous more than two decades from 1950 to 1978, regardless of where you stood on the interim scale. this country's family income was growing together. virtually every group had a significant increase. the lowest 20% of people actually had done somewhat better over that time. then the rest of them. -- time period than the rest of

them. this chart demonstrates what happened to the nation's share of income. there is a huge increase on the top end. that is one of the reasons why the first budget deal went down. i remember when they brought the budget deal out from the committee. this chart shows what the increase of the budget deal was. that went down. the bottom chart shows what the impact was by category of the

deal that did pass. what it shows is that the initial budget deal did not reflect the resentment in the country you have about what had happened to family income. the second agreement, which was passed, did more to actually reflect -- did more accurate -- did more accurately reflect what happened over the previous decade and it responded to those events in a way that was seen as more fair. i would say we also need to remember, when president bush signed the package, he really did contribute significantly to his own defeat in the election.

i would point out years later when president clinton signed his budget deal, the democrats were also rewarded by loss of control in the house of representatives. it demonstrate -- demonstrates that if you do the right thing, you better not count on getting thank for it. that is not the way politics works. -- work. i should say the reason the first budget deal went down in the house is because newt gingrich opposed it on the republican side because it had taxes. george miller and i organized the democratic opposition because we did not like the impact on different income groups on that package. after the first package went

down, i recall sitting in a deserted room using a large caplet of paper -- tablet of paper. while dan certainly did want to do that, in the end, he recognized the center of gravity was not what he thought it had been in the first package. i wanted for the final passage, but i did not vote on the first passage -- package. i have to tell you. we talked about tom this morning. i have never seen him matter in my life than he was -- and the rear in my life and he was at us when we voted against it. -- angrier in my life than when

he was at us when we voted against it. you can tell which one is the glass eye. in that one, there is a touch of human kindness. [laughter] it was a hot caucus. the other point i would make is that i think we would be better off that are achievable than a larger deals. i do not believe i would define success by whether or not the and it appears can achieve a balanced budget -- whether or not the negotiators can achieve a balanced budget.

over time, that is a highly acceptable result as far as i am concerned. secondly, i would point out because revenues are in contention, i would point out it would be good to remember within the past 40 years, we have never achieved a balanced budget in this country, except when revenues were equal to at least 19.8% of gdp. i think there is a lesson in there for anybody. i have other observations, but i would rather wait. >> thank you. congressman, you were the ranking republican on the house budget committee with chairman panetta. you gave me a comment when i asked to participate -- ask you

to participate that you were in the minority. i do not recall if you voted for the first package but i assume you did. welcome and thank you for your willingness to share your memories. >> i am honored to be sitting in a nice senator's seat with all these luminaries who worked so hard on that venture. i ought to say i subscribe to the sununu theory of what happened. he outlined it pretty much according to my recollection. when he got done, i said, it was pretty good, except he was too easy on newt.

warmth and charm. [laughter] i have some comments. we all look at it differently depending on where we sat. i sat at the lowest on the latter. my perceptions of what happened are probably going to be less valuable than most of the other people who sat there. i look at the differences between now and 1990, and we have a divided government. 1990 was easier because we did not have the debt ratio weighing on us. we had a significant deficit. but the long term looked possible if we could solve the

sshort-term problems. that was easier. in 1990, the parties were competitive, but they were not polarized. in those days, the bad guys were the opposition. today, they are the enemy. there is a world of difference between those two words. yes, we had some distrust. also, we had the ability to work with each other and believe each other and it made life easier at that time. there were other divisions in the congress. the party polarization today tends to make it republicans versus democrats all the way. there were other sub factions in those days. the budgeteers verses the appropriators, etc., that cut across some of those party

lines. the most important difference, in my judgment, is that there was less outside pressure upon the negotiators from the radio and tv extremists, lobbyists, core constituencies, users of social media, etc. mostl they did not get 500 e-mails every minute in their office. they did not have people featuring them on tv and them.fying membe for me, there are some lessons. one is, in budget matters, never rely on regular order.

it does not work. when everybody has a veto, nothing gets done. the agreement in 1990 takes both leadership and follow worship. we have credited the leaders. we know who they were. you also have to give credit to those who follow. as john pointed out, there were those who did not follow. you need to appoint the people who do negotiating and let them be leaders and hope that others follow. as the minority house negotiator, i believe my single most important contribution to

that agreement of 1990 was i did not get on the way of anybody doing important things. the final negotiations have to be done at the top. they have to have support. republican support fell apart in the house. as an interesting aside, i would mention there is a submission is suspicion -- suspicion that that maybe this year, that the house negotiators may not have all the support on the government side, as we did not have in 1990. i think john was right about the opposition bubbling up pretty much at the end of the process. i am not a perceptive fellow, because it did not occur to me until perhaps a week before the

first vote came up that we were getting into trouble and we had a lot of falling off. the deadlines are crucial. without them, negotiations never end. i thought six months was much too long in 1990. i suppose one advantage this year was the fiscal cliff. it is a deadline. it is a disastrous deadline. something is going to have to be done. whether it is the right thing, whether it is as good as 90 or not. i do not know. another rule for me is ignore the outsiders. do not give the core constituencies of the lobbyists much time. they are always going to be mad at you. get the job done as quickly as

you can under the rules before the extremists turn up the pressure. another rule for me is if you turn down a responsible deal, you will get orders fo. republicans in the house knew they were going to sentence themselves to a worse deal. they were perfectly willing to let that happen. it turned out to be a better deal for david. congratulations. [laughter] a worse one for us. another thought i learned from david a long time ago is that no deal is perfect. the deal that we republicans fought was less good in 1990 -- fought was less good did help to less prices a few years

later. those who vote for it are likely to lose their jobs. i would urge them to do so anyway because even in a recession, it is probably better work than in congress anyway. >> joined by speaker foley -- he would suggest that bob, former cbo director , at this time, with all the pressure put on his office, that you go. he would like to hear your comments. we are turning it over to you. >> thank you. is a pleasure to be with this distinguished group and also, as others have mentioned, to be up here speaking to you rather than down there being spoken at.

which happened many times. i thought i would say a few words about the different dimensions of this. first, the difference in pressure to reach an agreement now versus then. as bill frenzel and tom davis has pointed out, the political and media environment are much more hazardous today than they were then. for all the reasons they have laid out. as bill and many others have pointed out, the sequestration sword that was hanging over this nation in 1990 was much more serious -- it was three times, more than three times as great as the sequestration percentage cuts that we are looking at on january 2. third, the initial bush budget for the fiscal year of 1991 was

based on quite unrealistic economic assumptions and failed to include anywhere near enough money for the savings-and-loan bailout that others -- it became the field during the spring of 1990. the economy was beginning to falter during the spring. interest rates were rising. it is interesting to think about that a little. right now, fed reserve policy basically has insulated us from one of the major consequences of fiscal irresponsibility. when interest rates begin to rise, people in the housing industry, people selling durable consumer goods, stuff on

credit, they immediately begin to howl. now we have none of that -- really, for the average american out in dim one or wherever -- des moines or wherever, the consequences of our fiscal irresponsibility are not great. you can feel badly that the country has huge deficits and is unwilling to live in its means, but in your day to day life what you are worried about more is do i have a job. you are not worried about inflation because it is very low. one of the great devices that gets the people behind the leaders in trying to tighten our belts is missing. as many people have said, the attention that thof the nation was not on this topic particularly after august's 2, when iraq had invaded kuwait.

by august 10 we had deployed naval assets to that area as well as air assets in september and october. the president was getting together a coalition to invade iraq. at its peak we had more than 700,000 american troops in that part of the world. sure, we have uncertainties in the middle east right now and conflict going on, but this was an exploding issue which drew attention away from the fiscal problem. lastly, the white house was in the hands of the republicans. congress was -- both houses were led by democrats. the failure in congress was

clearly going to be one party's responsibility. right now, the situation is uncertain. also, those in charge of congress worried about congress's reputation. how the american people view them. where we are right now as a baseline for how americans feel about congress is not -- there is not much further down to go. that is different. reaching the deal, was it easy? the answer is no, it was not. it was long and arduous. there was a lot of time that was wasted. the effort made when the president brought people, the leaders together and said, we have got to solve that. they were then months of meetings and -- on the senate side, 26 principals were

participating. when you a 26 principals you have several multiples of that staff. in my view, having been staff, that slows down agreements. any good staff member should be able to provide 10 reasons why john sununu's latest proposal is lacking in desirability. this process went on and on and did not progress at all. it was an education for people who were not steeped in the budget minutia the way senators were, but there was a real progress. we then went out to andrews and if anything the situation was worse. i have my access from the

andrews summit, which i did not realize i had until they cleared out so they could put a new roof on because of sandy. they said, what are you saving the stuff for? i thought, this is what i am saving it for. my number is 108. i was not a lowest ranking person there. it was a room where food was consumed, but there was a whole lot of staffing and it went on and on until 2:00 at night sometimes. very little happened in the way of progress. until the much smaller group, the 8 people, largely without

staff met in speaker foley's offices. there was an agreement reached which, as was pointed out, did not pass the hurdle but got halfway down the track and was a symbol of progress. that progress in part was the result of miss judgment on the part of some important players. i would say, senator byrd was convinced that the caps that were part of the agreement and insisted upon were not going to work. they were very modest for the first couple of years. the view was this would not stick for a long period of time. so we could sign on to that.

let me close with just saying a few words about why this agreement seems to be viewed as a great success of diplomacy or leadership or what ever, notwithstanding the fact that the first two years after the agreement, the deficit rose. it was at a historic level and then rose for the next two years, which had a huge impact on president bush's reelection. i could not agree with you more that this agreement and the president's role in it was the most significant component of our decade-long effort to finally achieve a balanced budget and surplus.

for one thing, in historic terms, the caps placed on discretionary spending were not too tough. relative to what we're looking at and talking about now. the initial ones were to keep discretionary spending in real terms constant. let them grow with inflation. that as a whole lot different than anything anybody has on the agenda right now. in fact, domestic discretionary spending rose in real terms every year between 1990 and 2000 except for one year when it fell just by $1 billion, not significant. it held for one year but it went up continually. as a percent of gdp it rose

steadily from 1990 to 1995. that was because of various emergency and other escape valves were taken advantage of. the most important thing, the unsung hero of the 1990 agreement, is really mikhail gorbachev. the soviet union fell apart during this period. the discretionary spending control was really all on the defense side. we went from 5.2% of gdp in 1994 the fence down to 4% by 1995. by 2000 we were at 3% of gdp. of course, this was justified by the fact that the evil empire was not there to justify our large defense establishments.

but had that not happened, this might be judged by history in a very different way from how it is now judged. third, alan greenspan was a big player in this in the sense that as the budget brought under control he assured us of an accommodative monetary policy and interest rates drifted down. because of lots of different things, we entered into a period in which we had the longest, most robust expansion of our economy in american history. which cause, of course, revenues to rise very briskly. in part because of dotcom, in part because we had raised income taxes on the wealthiest

americans at a time that we had just raise the marginal rates for those individuals. a confluence of all those factors got us from the largest deficits not in g.d.p. but in dollar terms, to four years of budget surplus at the end of the decade. none of it would have happened without the leadership of president bush and the leadership of the congress, who realized that their reputations and the institution's reputation was on the line. and they came through. >> thank you very much. speaker, i think we will give you the last word, but before we give you the last word we have representation from the office -- to the extent we can say that. i will let barry -- then i will

let speaker wrap you up. >> i am here -- i have never had it worse insult in my life. in any case, my number was 1 01. why? i printed it out. i knew. >> tiao grant you. -- he outranked you. >> a year ago after the success of the super committee -- i misspoke. i met the failure of the super committee. i started getting phone calls from the bipartisan policy center, specifically with respect to the sequester and with respect to the defense sequester. the reason being the last sequester we had, in fact, the only sequester we had under the budget enforcement act was done in early 1991.

and it was done, organized and led by three people at omb. the budget director, who has passed away, the general counsel, who has passed away, and me, who has been in therapy for the past 20 years. but in any case, i started getting questions about what influenced the sequester. when i was asked to appear here, i had gone down to see what information i had from 1990 and 1991. basically, it was this -- this is a tombstone, being a "wall street journal" notice of an announcement of agreement that he had prepared. he had 56 of them done for me and the other staff. i had this on my desk since for the last 22 years. inevitably people would come up

and say, but the hell is that? it says, u.s. government, $492 billion and no cents, and on the bottom it says, this program was initiated by the president of the united states in conjunction with the bi-partisan congressional leadership. the undersigned adviser, negotiator, and executor -- the office of management and budget. i was proud to have this. i can tell you, i never worked harder for anything in my life and this piece of plastic. in any case, most of the presentations so far have been on the policy. i was very much about the process. in that sense, i want to talk about a process perspective, three different things. context, precedent, and value. context -- it has been mentioned that back then we did not have

laptops and cell phones. i do not remember governor sununu, when we first guarded this -- something like in june or that nature that we started planning to get away. when we started discussing different options, i do not think andrews was first, but andrews quickly developed a very good option because of the military police and the control. we had control of who got in and who did not. number two, working at omb -- >> let me add, the primary consideration is, how could we get away from the press? >> exactly. i. control i met the press -- where you could get away from it. the other thing i wanted to mention was that there was no laptop, there were no cell phones than . en.

we were able to give estimates of policy options on us like that. we were able to give estimates. he turned to me and said, i want you to be able to do that when you get to andrews. i said, what am i to do? set up an auxiliary omb out there? he said yes. so we set up computers so that all the staff -- i and one other guy were there and communicating. how about cbo? he said, who? he was not interested in helping cbo out. i said, how about treasury? he said, help them out if they need any help. the idea of being able to go out there, away from the media, and still be responsive -- that is one of the reasons it was extremely demanding for me. the second thing i wanted to talk about was president.

it has been mentioned here, but -- precedent. it has been mentioned here, but getting into small groups -- the gentleman on my right as much more experience than i, but i feel that you do not get to an agreement with 535. not even with 26. you basically get to agreement only with a very small number people. bob was mentioning, others mentioned the importance senator byrd played in this. the agreement between senator byrd speaking for the administration -- it eventually got down to the two of them, discussing. it was mentioned on the caps. a quick anecdote on the caps. the numbers for 1991 and 1992 were fought over to the nail.

now we can not 1993, 1994, 1995. remember, this was budget authority and outlays and 1991 and 1992 were three different categories. starting in 1993, it was just one category. so he turns to me, he was busy with other things. he says, go work out what byrd has got, the numbers for 1993 through 1995. he said, did the best deal you have -- i have to do other things. so we sat down, and i said, ok, what numbers would be chairman want for 1992 through 1995? to repeat what bob just said, he said, the chairman doesn't care. i said, what? he said, the chairman is fully convinced president bush will be defeated in the 1992 election and therefore the numbers that we put in to the agreement for 1993, 1994, 1995 will not

matter. i looked at him and i said, how about straight lines? he said, good. i went back and said, i really fought for this. it was tough. i think i deserve the award. but i strait land the numbers from 1993 until 1995. he said, fantastic -- what happens? the chairman was right. though clinton came out. leon panetta became my first boss. he came to me the first night -- the president wants to know how to break these cap numbers. i said, you can do it. we wrote a lot to do it. he was not able to do that. but what he was able to do was because there were just one cap for all spending, defense spending went way down, non- defense discretionary way up. i called this his revenge because all those numbers actually in total were held.

there were small amounts for emergencies, but the numbers tell, the distribution between the numbers. but to get away from the press, to get away from -- we will have to do it now just as we did it then. it will eventually come to an agreement with president obama and speaker boehner. what ever can be done now to get to that process, the sooner we get there, the better off we will be. will we get the year before the new year? i do not know. -- there before the new year? i do not know. but one reason it is good to look back at andrews is that help us get to an agreement. we had problems, but we essentially got there. that is the precedent that i think should be taken. my last point is value -- he went to the dark side, a joint cbo, then for most of the past 10 years i have been in the

international budgeting community. i want to say that particularly to the gentleman on my right. and this is a tremendous value from tthat is not recognized ine u.s. the value is the spending caps. by spending caps, i mean not and taxg-go expenditures. that has served as a precedent for a number of countries that have had successful fiscal experiences since. they include sweden, switzerland, holland, chile, finland. it does not include the european union. the european union is still -- they are still suffering from it. i do not think the situation in greece or whatever would be as significant as it is now if they

had moved off to the bea as we did. i think it was a tremendous success. it has been a precedent for other countries. i hope the european gets there. i just was in berlin last week testifying in front of the bundestag, mostly about setting up a german cbo, but also try to say, look what we did in 1990. look at the significance and how important it was. i hope you go there. and for us now here, i hope we go there, what ever comes out of the agreements in terms of tax increases and entitlement cuts -- i hope we build that something along the lines of the budget enforcement act. my last comment is to agree with others -- one of the principles i learned is no good deed goes

unpunished. that is very true of deals with budgetary impact. >> thank you very much. mr. speaker, before you arrived we commented on the fact that at the and it came down to what was dumped in the press as "the big eight." we have one quarter of them here in the form of you and governor sununu. thank you for your willingness to come here. we appreciate any comments you would like to make before we close. >> thank you very much. it is good to see many of you again. i think that we are facing a much tougher challenge than we did in 1990. one of the things that i think

we had in 1990 that we are missing today is not only by partisanship, which we have talked about, but trans- partnership. we had members of both parties that were anxious to take a step forward to solve the problem. in doing so, to answer the concerns of their fellow members. i remember one member saying, do not bring this back to the senate. we have people in the senate -- we should focus on the agreement. others said the same thing about the house.

but the center agreement was around a smaller group. the achievement was -- it is difficult to copy today. that is right -- so i'm not sure what our next that should be in the process of trying to find an agreement. i think the example of 1990 -- an example of bipartisanship and isanship.nershi

i will also say that i think there was some real value -- not so much from lobbyists. i am not a press critic all the time, but most of the time. they have a purpose. the value of the press -- they will go and say, did you hear what john sununu said? do you have any comment on john sununu's comments? or, as you know what so and so said about you?

so i hope that we can find something comparable. i do not know what it will be. value. has a special body - give the eight or the four a chance to act without the constant reporting and destruction of the press. -- disruption of the press. i remember him saying that taxes or fees -- would you be willing to try?

we can at all make judgments about decisions that were made then and what we thought of them at that time. also, dick was an extraordinary celebrity for his time. every hostess wanted to have him at their dinner table. and a ambassador was told by a social secretary he had to cancel. it was a big scandal at the

time. but i think -- he was smart. he was pretty smart. i do not know we have someone like him around. in any case, i welcome, and i am sure you do, all the efforts we can make to come to agreement. because if we do not, i fear for the consequences. one of the senators from the state of washington, my state, patty murray, said maybe we should just let me cliff happen. i do not agree with that.

it is uncertain and highly dangerous. again, i am glad to be here. i commend everyone, because this will or not succeed on the basis of how much effort the participants here are willing to make. the president, the congress, and other interested parties. i think the congressional budget office has done a good service by bringing all of us together. i hope you feel after the conclusion of this meeting that your effort was important. as many of you know, he is the

son of a very distinguished ambassador to japan. if you did not know his father, you missed a real opportunity. the ambassador was i think the best foreign japanese speaker i ever met. i would be put on the same program with him -- he spoke japanese, and it was surprising

to hear myself conversing with him with great facility and fluency. i think there were 6000 japanese who bade him good buy at the airport. -- goodbye at the airport. more than any other ambassador in my experience. of course, while he was in japan, the ambassador was attacked by some left-wing fanatics japanese, and -- you remember? what was your father reading in the car?

and your father suffered from hepatitis as a result. i am digressing a little bit, but i think the family has made a great contribution to the united states. to the general welfare of our country. the japanese were so embarrassed about the attack on the ambassador that they had the japanese fleet protect him.

they did it with me first, then with the israeli embassy. the russians refused it. the chinese refused it. but it was an interesting experience. i remember that. again, thank you baran much for inviting me. >> i would just like to add something to what the speaker has pointed out. the climate really was different at that time. this was not the only big piece of legislation that we worked very hard on on a bipartisan basis. we passed the clean air bill, which had been languishing for over a decade. we passed the americans with disabilities act, which was

extremely difficult to negotiate. we passed the civil rights bill. there was, if you will, a precedent in terms of cooperation and climate. as the representative point out, later on that would manifest itself in what was really an unprecedented interaction between the white house and congress on dealing with the invasion to kuwait and trying to pull together a unified perspective. i think the climate -- it was not accidental. we worked awfully hard in order to maintain that. i certainly feel that the key to it was the fact that tom foley and president bush had been members of congress to gather. they had developed a personal relationship. other members of congress, including dave and others, had been there. the president was in the house -- there were personal

relationships that we, frankly, in the nicest sense of the word, exploited as much as possible in order to maintain the comedy of the process. one more point, since we were commenting on him -- he was really in my opinion from at least our perspective the heart and soul of the details of this process. barry and others have talked about the importance of the budget enforcement act. i remember one of my first days in the white house, in 1989, as a new chief of staff, he came and talked about the fact that it was really not working well, that they needed a difficult -- there was a difficult situation coming forward in terms of timing. it was really, in early 1989, that we started these

conversations in the white house about looking for an opportunity to recommend a replacement for gramm-rudman hollings. that became the bea. i have to give him credit for being way ahead of the process. >> thank you bir much, governor. in the interest of time, i have two questions -- working for the bipartisan policy center, i want to make it bipartisan. my first question, with some trepidation, governor sununu, can i say that as we have discussed, conservative republicans, as you already mentioned, gingrich, dick armey, opposed the agreement all the way to the end. i looked at the final vote -- they voted against it in the final vote also. the question to you, governor, or to any of you from a

republican perspective, do you think the 1990 budget agreement launched what might be thought of as a new republican party and its right turn since? >> no, actually do not. i think there was always say -- in my lifetime, starting back with ronald reagan, a strong component of conservatives in congress. you can even go back a little further into the taft days. there always is the internal division in parties. there is always the internal division in parties. as i said, in my opening remarks, you have to worry

about political differences between the philosophies, in the parties, and then the detailed political differences in the parties when you are negotiating this kind of agreement. we thought we had set up a process in which all the slices on our side were involved on a daily basis communicating on a daily basis, and part of every compromise that we took every step of the way. frankly, as i thought back on this, i will stand on it again -- we had an agreement on the republican side amongst all the republican participants in the negotiations, including newt gingrich and those you have mentioned who he was communicating with. unfortunately, at some point there after we announced this

agreement they began to have second thoughts. as bill pointed out, you and up with a agreement that is much worse from the perspectives of those that rejected it than you would have had earlier. he will see this all the time. the hardest time i had as governor in new hampshire was when i had 75% republicans in the house and 75% republicans in the senate. you learn to deal with it and live with it -- is part of the process. it is never going to change. it is always going to be there in some form or other. this idea that somehow this is new is just mistaken. >> thank you very much. i guess in the matter of bipartisanship, speaker foley, before you arrived it was pointed out that some of the democrats in your caucus feel

very strongly about the regressive taxes on gasoline, alcohol, cigarettes, along with the medicare and pension reductions. in fact, to your right, representative obey was one of those two eyes understand was opposed to the initial agreement. mary road in "the washington post" on october 9 that your caucus, you had collaborated with the enemy. i guess i would ask you, mr. speaker, who the enemy was, and did you? >> i do not think i want to declare the enemy was. but we wound up -- i think the broad benefit of the agreement

finally had some affect on the individual difficulties involved that the mentioned. and i think it is true that personal relationships can very often have a consequence. days working -- dave, who had a distinguished career in the house. he fought very hard. when you are able to go do something on the basis of personal relationships -- i think it helps.

i had a very good relationship, i think, with president bush. i felt very comfortable talking with them. -- him. i think that did help. it made a difference for everyone. republicans -- you had a republican president. i was a democrat. together, i think, it may a difference. i do not know if we have anything like that today. i am not going to pass judgment, but i think there are great differences today than there were in 1990. >> mr. chairman? >> if i might comment just a moment on this issue. >> two minutes.

>> i think while it is being spoken here that it is good to have a personal relationship, even as high as the president, i will come down here in the congress -- is very good to have polish ship and members of the -- fellowship and members of the party who are friends. i think we're at a point in history where everyone goes home and splits and there are few friends left. when i was here, sponsorship and work on a bill could be traced to friendship. i got a democrat to go on it with me, people -- the next time i got so and so and into the house and got somebody else. that is needed now more than ever as we try to solve some of these problems, but i do not

know we can build that. >> thank you, mr. chairman. let me just say, ambassador, speaker foley, complimenting them -- and i think personally all of you are great public servants. we thank you very much for taking the time this morning to be with us and reflect on the 1990 budget agreement. thank you, and i will turn it back to paul. [applause] >> fantastic seeing you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> tonight, house speaker jenner, house democrats -- a

dinner, house democrats, and president obama talk about the so-called fiscal cliff, then, alan simpson and erskine bowles get some of the fiscal choices facing congress. >> tomorrow on "washington journal," a guest from national public radio discusses the health care law and potential hurdles in congress and state courts. then, a reuters tax correspondent looks at the payroll tax cut enacted in 2010 and at the white house and congress plan to extend it. after that, more about the payroll tax cut with a guest from the tax foundation and from the center for american progress. they will discuss whether it should be extended, and the impact on the current economy. plus, your e-mails, phone calls, and tweets. live thursday at 7:00 a.m. on c- span. >> now, speaker john boehner and

republican leaders talk about fiscal cliff negotiations. speaker boehner said he is optimistic the deal can be reached with the president. >> morning, everyone. going over the fiscal cliff will hurt our economy and will hurt job creation in our country. republicans are committed to continuing to work with the president to come to an agreement to avert the so- called fiscal cliff. one reason why we believe that we put revenue on the table as long as it is accompanied by serious spending cuts to avert a crisis. we believe this is the president's request for a balanced approach to this issue, and we are going to continue to work with the president to try to resolve this in a way that is fair for the american people. we all now that we have had the spending crisis coming at us

like a freight train. it has to be dealt with. in order to try to come to an agreement, republicans are willing to put revenue on the table. it is time for the president and democrats to get serious about the spending problem our country has. i am optimistic. we can continue to work together to avert this crisis, sooner rather than later. >> good morning. last week, the president's chief political adviser indicated that medicare and medicaid are the main drivers of our deficit. i know we have seen this morning also several editorial writers indicate the same, that it is important that we put these drivers of the deficit on the table and include them as part of any agreement to avoid the fiscal cliff. as the speaker said, we have

done our part. we have put revenues on the table, something we did not do two years ago during the debt ceiling negotiation. we still believe that it is most important for us to address the economic situation in this country where so many people are out of work. that is why we take the position and believe strongly that an increase in marginal rates, income-tax rates, is not the way to produce growth and put people back to work. but we have not seen any good faith effort on the part of its administration to talk about the real problem that we're trying to fix. i am told mr. bowles, some of us will meet with him later today, said earlier this morning there has been no serious discussion by the white house on entitlements, on medicare and medicaid. this has to be a part of this agreement, or else we just continue to dig the hole deeper asking folks to allow us to

kick the can down the road further. that we do not want to do. >> as we continue to move to solve the fiscal cliff problem, one thing we want to look at is make sure small business is ok. i had my first business when i was 19 years old -- a sandwich shop. listen to small businesses, they are the engine that makes the economy grow. today we will meet with individuals in the business community. next week, a small business coalition will talk to us on ways we can solve the fiscal cliff while the same time growing this economy. the goal of this republican majority is to solve the fiscal cliff once and for all and put us on a path to grow the economy. >> we are 34 days away from what would be the largest tax increase in american history,

and the speaker boehner and the republicans have put forward a balanced plan that would prevent that from happening and not devastate our economy at a time when our economy continues to struggle and people are having a tough time finding work. we need to take action that will insure that small-business owners all across this country continue to be able to survive. many have said that the president's approach in raising taxes would act to devastate the economy. ernst and young estimated jobs lost -- a plan that would cut nearly 1 million jobs is a nonstarter. we are working to find a better way. a common-sense way. we can raise tax revenue by simplifying the tax code, not increasing tax rates. we can address wasteful government spending without jeopardizing our commitments in the national defense and protecting our most honorable. we can jump-start our economy by assuring americans that

congress and the president can work together to get the job done and deal courageously with the pressing problems of today. when it comes to the fiscal cliff, the president and congress will either fail together or we will succeed together. there is nothing in between. i am confident that we can pass the test and do what is good and right for the american people. >> the president has been talking a lot about taxes lately, and as a cpa who practiced for years and a member of ways and means committee, there is no one who likes to talk about tax more than i do. but let's be honest -- talking about taxes is not going to solve the problem that america faces. we have to turn to the spending side of the ledger. furthermore, his tax proposal will kill about 700,000 jobs and do harm to the economy, again, the wrong direction.

i think house republicans have set a fine precedent -- we passed a framework to address the issue of taxes. fundamental, comprehensive tax reform. pro-growth policies that kickstart the economy rather than hurting the economy. likewise, we have laid out a bipartisan plan to address the drivers of our debt in the spending programs. i think house republicans are eager to work and negotiate with democrats in the senate and the president once they figure out what their proposal is to address the fundamental problems. >> my colleagues have laid out the issues very well. republicans want to avert the fiscal cliff in its entirety. what we need is the president to come forward with a plan on how he wants to avert the fiscal cliff.

it is irresponsible of us not to deal with the spending issue and simply to push for raising taxes on hard-working american people. many of us come from small- business backgrounds -- family owned businesses. we understand the situation very well. but it is important we not pass this problem along to our children and grandchildren, but we deal with it in a responsible way. the republicans have come forward with a responsible plan and will continue to do that and look for ways to keep us from going over this fiscal cliff. >> we have time for a couple questions before we go to our meeting. >> your colleague has told other colleagues that it is time to vote to extend the middle- class tax cut -- i want to get your take on his comments.

more importantly, is this the direction the conference is going? >> i told tom earlier that i disagree with him. he is a wonderful friend and a great supporter of mine, but raising taxes on the so-called top 2%, half as taxpayers are small business owners who pay their taxes with personal income tax filing every year. the goal here is to grow the economy and control spending. you are not going to grow the economy if you raise tax rates on the top rates. it will hurt small businesses, per our economy -- it is why it is not the right approach. we are willing to put revenue on the table as long as we're not raising rates. >> republicans have not yet put a number on revenue. democrats seem to be taking entitlement more and more off the table -- neither side seems willing to lead here in terms of taking a real risk. why are you than optimistic

about? >> i do not think this is the appropriate place to negotiate what may be the biggest bill many members will ever vote on. i know you would all love to have me negotiate here with all of you, but i think i will save the negotiations for the president. >> why are you optimistic a deal can be reached? >> the president understands and i understand that going over the fiscal cliff will hurt our economy and her job creation in our country. this is not good for our country. it is as simple as that. the president understands that. i was born with a glass half full. i am an optimist. >> speaker boehner and anyone else who wants to take this, as far as spending cuts go what specific cuts would you like to see? >> we will have that conversation with the president. thank you, everybody.

>> good morning. is everybody sat? i thank you, and we had yet another caucus where we were fortunate to have gene sperling from the white house today. continuing to talk about the importance of making sure we put this nation back to work. because we know and continue to underscore that job creation equals deficit reduction. clearly, democrats and republicans both agree that we need to put the country back to work. democrats would like to unders t